SEBI registers Power Grid InvIT, paves way for asset monetisation

  • This is the first time any PSU in the power sector will undertake asset recycling by monetising its assets through the InvIT model

  • Sources said that assets worth Rs 10,000 crore will be monetised in the first phase

New Delhi: Market regulator SEBI has registered Power Grid Infrastructure Investment Trust (InvIT) on Thursday, paving the way for asset monetisation of the Maharatna power PSU’s transmission networks. Power Secretary Sanjiv Sahai broke the news on Twitter, saying, “SEBI has registered the Powergrid Infrastructure Investment Trust (InvIT). This paves the way for asset monetisation of some transmission assets of Powergrid.” The Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Narendra Modi, had approved the monetisation of assets of PowerGrid through Infrastructure Investment Trust (InvIT) model in September 2020.

This is the first time any PSU in the power sector will undertake asset recycling by monetising its assets through the InvIT model and will use the proceeds to fund the new and under-construction capital projects.

Asset monetisation: Power Grid InvIT to monetise assets worth Rs 7,000 cr in 1st lot

The power PSU has already secured approval from the Cabinet for the monetisation of assets worth more than Rs 7,000 crore in the first lot. However, sources who spoke to PSU Watch on the condition of anonymity said that assets worth Rs 10,000 crore will be monetised in the first phase. Depending on the response received in the first round, further asset monetisation will be carried out by the Power Grid InvIT in the future.

ALSO READ: Cabinet okays PowerGrid InvIT; assets worth Rs 7,000 cr to be monetised

Govt stresses on asset monetisation through InvITs

The Budget 2019-20 had emphasised investment-led growth and indicated that new and innovative financial instruments, including Infrastructure Investment Trusts (lnvITs), have been launched as part of the brown field asset monetisation strategy for augmenting infrastructure investment. Asset recycling is a key strategy of the government to release the capital invested in operational assets and the proposed InvIT of POWERGRID would attract both domestic as well as global investors, including Sovereign Wealth Funds.

The backdrop

Power Grid has assets worth over Rs 2 lakh crore and has made investments of Rs 1 lakh crore in setting up electricity transmission infrastructure. The InvIT will help Power Grid reduce its debt burden and will allow the government to increase its dividend receivables from the PSU.

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