Cabinet approves asset monetization of subsidiaries of PGCIL through Infrastructure Trust

The Cabinet Committee on Economic Affairs (CCEA) has approved Asset Monetization of subsidiaries of Power Grid Corporation of India Limited (POWERGRID) through Infrastructure Investment Trust.

It has given approval to POWERGRID to undertake monetization of its Tariff Based Competitive Bidding (TBCB) assets, held in existing Special Purpose Vehicle (SPVs), through Infrastructure Investment Trust (InvIT).

The approval would facilitate POWERGRID, to undertake asset monetization of its identified TBCB transmission assets through InvIT, so that the proceeds from the asset monetization could be utilized for fresh investment in the transmission network expansion and other capital schemes of the company. In the first block, POWERGRID would be able to monetize 5 TBCB assets of a gross block of Rs 7164 crore (as on September 2019).

The assets proposed for monetization through InvlT are operational assets proposed to be managed by the existing manpower of POWERGRID already deputed for this purpose and therefore no additional employment generation is envisaged with regard to them.

However, additional employment opportunities are likely in services incidental to InvlT, such as merchant banking, legal advisory, trusteeship, financial and taxation consultancy, valuation, printing, advertisement and in allied activities.

Implementation Strategy and Targets

Monetization of the first block of eligible TBCB SPVs- in FY 2020-21. Based on the experience gained and depending upon the eligibility for monetization of TBCB SPVs, further monetization shall be carried out in future, as per the directives and targets fixed by the Government of India.

Background

The Budget 2019-20 emphasized investment-led growth and indicated that new and innovative financial instruments including Infrastructure Investment Trusts (InvlTs) have been launched as part of the brownfield asset monetization strategy for augmenting infrastructure investment.

POWERGRID

A public limited company POWERGRID under the administrative control of the Union Ministry of Power started its commercial operation in the year 1992-93. Today it is a Maharatna company engaged in the business of power transmission. The Company, along with its wholly-owned subsidiaries acquired through the tariff-based competitive bidding process (TBCB), owns and operates a pan India transmission network.