Real Estate Perspective on National Monetization Pipeline
Finance Minister Nirmala Sitharaman launched Rs 6 lakh crore asset monetisation plan with an aim to fund the infrastructure projects over four years. "For the government, the pipeline should provide enough time to complete the administrative groundwork necessary in advance to make the national monetisation policy (NMP) a success," wrote Sonal Varma, Nomura's chief economist for India and Asia ex-Japan in a co-authored note with Aurodeep Nandi. Sanjay Dutt, MD & CEO, Tata Realty and Infrastructure Limited shared his views on 6 lakh crore National Monetization Policy and its impact of Indian infrastructure sector, " The national monetization pipeline is a step in the right direction that will enable private players to enhance the operational capabilities of brownfield infrastructure assets. Moreover, it would provide an opportunity to upscale the development of the Indian infrastructure and is likely to positively higher FDI and the Domestic capital flow, lower the deficit, higher India rating and higher GDP for the economy. This move will boost privatization and help the country to establish a stronger avenue for additional revenue that would help more public centric developments.” According to Ramesh Nair, Chief Executive Officer, India & Managing Director, Market Development, Asia at Colliers, “The government’s National Monetisation Pipeline scheme is a timely step to unlock value and usher in investments across a plethora of sectors. Under the scheme, the ownership of the assets will be with the government, while the private-sector entity will refurbish and operate it either solo or through a public-private-partnership. Warehouses, accounting for 5% of the total monetisation plan with monetisation value of INR28,900 crore, has immense potential especially led by the current growth spurt in the e-commerce space. This plan will give investors and developers access to well-located warehouses near urban centers, proving an impetus to last-mile delivery ecosystem. Moreover, since the assets are brownfield there will be minimal development risk associated for investors and developers. The government has also identified vacant tracts of land and housing assets in prime areas of Delhi such as Sarojini Nagar, Kasturba Nagar etc for monetisation. This will give developers an opportunity to develop residential and commercial complexes under the PPP model in central locations. As for stadiums, underutilized stadiums that were built decades ago can be reutilized by leasing them to sporting and educational institutions on a time-share basis.” Amit Kapur, Joint Managing Partner, J Sagar Associates shared his opinion, “The announcement of the dashboard of NMP can be a significant source of finance of over US$ 80 billion (at nominal value) for the much needed infrastructure development by recycling the investment in diverse operating assets, over 4 years. 90% of the assets in the present pipeline belong to transportation (roads 26.7%, rail 25.4%, airports 3.46% and ports 2.14%), energy (power 14.17% and hydrocarbon pipelines 7.83%) and real estate (warehousing, urban real estate and stadia) based facilities. These assets will be attractive offerings since they are de-risked being existing, operating assets with proven revenue stream, avoiding construction risk with proven output/capacity. What is on offer is a clutch of concession formats permitting the concessionaire to build/refurbish and operate the asset with defined risk and performance obligations, without any transfer of title. The Government looks determined to actualize these targets with a monthly monitoring (by Cabinet Secretary) and quarterly monitoring (by Finance Minister) of implementation. The success of the offering would depend on adopting fair risk and reward allocation, as also efficiency of the bid process followed.”-
Tags : Interviews Real Estate Infrastructure Ramesh Nair Sanjay Dutt Tata Realty & Infrastructure Limited Finance Minister Nirmala Sitharaman Colliers Perspective National Monetization Pipeline Amit Kapur J Sagar Associates