Tuesday, October 4, 2022

Indian Oil may look at InvIT model for monetisation of pipelines: Director Finance

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  • Gupta asserted that the company cannot let go of control over its pipelines because they are crucial to the operations of the company

  • Indian Oil may also look at hiving off its retail outlets into a separate subsidiary for unlocking value

New Delhi: Day after the Union Budget for 2021-22 placed PSU asset monetisation high on priority for the next financial year, state-run Indian Oil’s Director (Finance) Sandeep Kumar Gupta has said that the company may look at the InvIT model for the monetisation of its pipelines. During a conference call with analysts and investors, Gupta said that the company is considering selling its stakes in one of two of its crude oil and petroleum product pipelines under the asset monetisation plan, but will continue to act as the operator of the pipelines.

“InvIT could be one model which we may look at but we won't sell 100 per cent. We will remain the operator,” said the top Indian Oil official.

‘IOC cannot let go of control over its pipelines, will sell minority stake’

While asserting that the company cannot let go of control over its pipelines because they are crucial to the operations of the company, Gupta said that only minority stakes in the pipelines will be sold off. The proceeds of asset monetisation would initially go towards boosting capital spending of projects such as one for producing hydrogen fuel, renewable energy ones or petrochemical plants, said the IOC Director (Finance). 

Indian Oil could create subsidiary for its retail assets

While responding to a separate question on whether Indian Oil will be looking at hiving off its retail outlets into a separate subsidiary for unlocking value, Gupta said that such a possibility cannot be ruled out. 

ALSO READ: Govt sets FY22 disinvestment target at Rs 1.75 lakh cr, puts asset monetisation high on priority

The backdrop

In Budget 2021-22 which was presented on February 1, Finance Minister Nirmala Sitharaman had said that a National Monetisation Pipeline of potential brownfield infrastructure assets will be launched. Detailing the asset monetisation plan, the minister had said that the Railways will monetise Dedicated Freight Corridor assets for operations and maintenance, after commissioning, next lot of airports will be monetised for operations and management concession, and NHAI Operational Toll Roads, more transmission assets of Power Grid, oil and gas pipelines of GAIL, Indian Oil and HPCL, AAI airports in Tier II and III cities, warehousing assets of CPSEs such as Central Warehousing Corporation and NAFED and sports stadiums are among some of the other government-owned assets that will be monetised. 

(PSU Watch– India's Business News centre that places the spotlight on PSUs, Bureaucracy, Defence and Public Policy is now on Telegram. Join PSU Watch Channel in your Telegram and stay updated)

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