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NEW DELHI : State-run Power Grid Corp. of India Ltd (PGCIL) has dropped plans for its second infrastructure investment trust (InvIT) tranche in the current fiscal under the government’s National Monetisation Pipeline (NMP), and is instead exploring monetising receivables from specific projects by securitising their cash flow, said two people aware of the development.

The change in plan comes in the backdrop of the lnvlT route facing issues regarding transparent price discovery, and those of taxation involving GST, capital gains, and stamp duty. This assumes significance given that the power sector comprises 14% of the total assets on offer under the 6 trillion NMP announced in August 2021 from leasing of public assets.

Of these, power transmission assets total 28,608 circuit km for monetization, accounting for 45,200 crore.

“PGCIL asset monetisation through InvIT route will not be pursued in the current financial year, given that the cost of funds is higher through it. Now, monetisation of receivables from project- specific special purpose vehicles (SPV) through securitization model is being looked at," said one of the two people cited above.

InvITs are trusts that manage income-generating infrastructure assets, typically offering investors a regular yield and a liquid method of investing in infrastructure projects. The InvIT route was proposed by the government as a fundraising route for state-run companies to manage their funding requirements without having to depend on government support.

Queries emailed to the spokespersons of PGCIL and union ministries of power and finance on Tuesday afternoon remained unanswered till press time.

PGCIL is the first state-owned companies to have offered an InvIT as part of the government’s brownfield asset monetization strategy, wherein the PSU monetised its five tariff-based competitive bidding (TBCB) assets having an enterprise value of 10,384 crore. PGCIL’s transmission network has 173,70 circuit km of transmission lines.

The monetisation through securitization model has gained traction with state-run SJVNL securitising the cash flow of India’s largest hydropower project, Nathpa Jhakri, with Bank of Baroda for a 15-year period under the NMP for an upfront payment of 2,000 crore, as reported by Mint earlier.

Power generation assets totalling 6GW of hydropower and renewable energy assets account for 39,832 crore of the NMP.

The overall power sector NMP target for the current financial year is 15,308 crore from state-run firms, including PGCIL’s second tranche of assets through its InvIT.

The targets also include India’s largest power generation firm NTPC Ltd plans to bring in a strategic investor in NTPC Green Energy Ltd and securitization of cash flows by NHPC Ltd and SJVN Ltd.. While proposals totalling 16,500 crore under power sector are being processed, the final realization by the end of this financial year is expected to be 11,500 crore.

ABOUT THE AUTHOR

Utpal Bhaskar

"Utpal Bhaskar leads Mint's policy and economy coverage. He is part of Mint’s launch team, which he joined as a staff writer in 2006. Widely cited by authors and think-tanks, he has reported extensively on the intersection of India’s policy, polity and corporate space.
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