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National Monetisation Pipeline(NMP)

GS Paper 3

Topics Covered: Infrastructure related issues.

 

Context:

The Centre launched the National Monetisation pipeline (NMP) in an effort to list out the government’s infrastructure assets to be sold over the next four-years.

 

Key features:

  1. The four-year National Monetisation Pipeline (NMP) will unlock value in brownfield projects by engaging the private sector, transferring to them the rights but not the ownership in projects.
  2. Components: Roads, railways and power sector assets will comprise over 66 per cent of the total estimated value of the assets to be monetised, with the balance coming from sectors including telecom, mining, aviation, ports, natural gas and petroleum product pipelines, warehouses and stadiums.

 

Objective of the programme:

  1. To unlock the value of investments in brownfield public sector assets by tapping institutional and long-term capital, which can thereafter be leveraged for public investments.
  2. To enable ‘Infrastructure Creation through Monetisation’ wherein the public and private sector collaborate, each excelling in their core areas of competence, so as to deliver socio-economic growth.

 

The Framework:

Currently, only assets of central government line ministries and CPSEs in infrastructure sectors have been included.

  • Monetization through disinvestment and monetization of non-core assets have not been included in the NMP.

 

The framework for monetisation of core asset monetisation has three key imperatives:

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Estimated Potential:

Considering that infrastructure creation is inextricably linked to monetisation, the period for NMP is co-terminus with the balance period under National Infrastructure Pipeline (NIP) i.e for FY 2022-2025.

NMP is indicatively valued at Rs 6.0 lakh crore for 4 years.

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Significance of the scheme:

Asset Monetisation needs to be viewed not just as a funding mechanism, but as an overall paradigm shift in infrastructure operations, augmentation and maintenance considering the private sector’s resource efficiencies and its ability to dynamically adapt to the evolving global and economic reality.

  • Such new models will enable not just financial and strategic investors but also common people to participate in this asset class thereby opening new avenues for investment.
  • Hence, the NMP document is a critical step towards making India’s Infrastructure truly world class.

 

Challenges to NMP:

  1. Lack of identifiable revenue streams in various assets.
  2. Level of capacity utilisation in gas and petroleum pipeline networks.
  3. Dispute resolution mechanism.
  4. Regulated tariffs in power sector assets.
  5. Low interest among investors in national highways below four lanes.
  6. The lack of independent sectoral regulators.

 

Insta Curious:

Have you heard of Compensatory Financing Facility (CFF)? What are its objectives? Reference

 

InstaLinks:

Prelims Link:

  1. About NMP.
  2. Key features.
  3. Applicability.
  4. Benefits.

Mains Link:

Discuss the significance of the project.

Sources: Indian Express.