In an attempt to generate enough funds to meet India’s ambitious infrastructure play, the state run public sector units (PSUs) have stepped up efforts including tapping the infrastructure investment trust (InvIT) route to generate resources. The first off the block may be hydropower firm NHPC Ltd that plans to leverage InvITs to monetise 10 of its 22 hydropower projects.
InvITs are trusts that manage income-generating infrastructure assets, typically offering investors regular yield and a liquid method of investing in infrastructure projects.
India’s largest hydropower generation utility—NHPC Ltd—will shortly appoint a consultant “to undertake an advisory study to assess the feasibility of different options of assets monetization of few hydro power projects such as InvIT etc in the context of NHPC Limited through limited tender route.” The Government of India owns 73.33% equity in the Mini Ratna PSU that has an asset base of ₹59,609 crore. The NDA government increased the divestment target from ₹90,000 crore to ₹1.05 trillion for the current fiscal year, focusing on consolidation of public sector undertakings and strategic disinvestment. The other central hydro sector PSUs are Tehri Hydro Development Corp. (THDC)., North Eastern Electric Power Corp. Ltd (Neepco), and SJVN Ltd (SJVNL).
NHPC has a power generation capacity of 7071 MW through its 22 operational hydro projects and two wind and solar projects. In addition, it also has four hydro projects totalling 4424 MW under construction and 10 projects totalling 7321 MW under clearances in its portfolio.
Finance minister Nirmala Sitharaman, in her maiden budget, increased the divestment target from ₹90,000 crore to ₹1.05 trillion for the current fiscal year, focusing on consolidation of public sector undertakings and strategic disinvestment.
“NHPC will be shortly appointing a consultant for the advisory study that has to be submitted by September end,” said a government official requesting anonymity.
The disinvestment proceeds will help the Centre invest ₹100 trillion over the next five years to boost India’s infrastructure.
NHPC posted a net profit of ₹2631 crore on a revenue of ₹8161 crore in 2018-19.
At present, India has an installed power-generation capacity of 357,875 megawatts (MW), of which around 13% or 45,399.22 MW is generated through hydroelectric power projects. In 2014, a concept paper on the possibility of a merger of all state-owned hydroelectric companies recommended a phased approach, starting with Neepco to be combined with NHPC Ltd, followed by THDC India Ltd and SJVN Ltd.
Also, the National Highways Authority of India (NHAI) is looking to raise more than ₹85,000 crore by fiscal year 2025 through InvITs and the toll-operate-transfer (ToT) model.
The NDA government has set an ambitious task of becoming a $5-trillion economy by 2024-25. Spending on infrastructure is imperative to bring India back to a high growth trajectory. However, the economy grew at its slowest pace in six years at 5% in April-June, amid sluggish demand, slowdown in the automobile sector, lack of private investment and job losses. With tax revenue growth remaining tepid, the Centre has relied more on non-tax revenues, including divestment, to reduce fiscal deficit to 3.3% of gross domestic product (GDP) in 2019-20.
Info – livemint