The Cabinet Committee on Economic Affairs, chaired by Prime Minister Narendra Modi, has approved monetisation of assets of Powergrid, a Public Sector Undertaking (PSU) under Ministry of Power, through Infrastructure Investment Trust (InvIT) model. This is the first time any PSU in Power Sector will undertake asset recycling by monetising its assets through the InvIT model. The proceeds from the asset monetization would be utilized by Powergrid for its CAPEX and the premium generated would augment the net worth of Powergrid.
This approval will help Powergrid monetise in the first lot, assets with gross block value of more than 7,000 crores. These assets, which include mainly High Voltage Transmission lines and substations, are held by Powergrid in form of Special Purpose Vehicles (SPVs). The proceeds from the asset monetization would be deployed by Powergrid in their new and under-construction projects.
Based on the experience gained, further monetization shall be carried out in future. Asset recycling is a key strategy of the Government of India to release the capital invested in operational assets. The proposed InvIT of Powergrid would attract both domestic as well as global investors including Sovereign Wealth Funds. The CAPEX plan of Powergrid for next two years (2020-21 and 2021-22) is Rs. 20,500 cr. The Government of India has enacted an enabling regulatory and taxation framework for InvITs and the proposed InvIT by Powergrid would deepen this market.
The InvIT would provide an opportunity to the general public and institutional investors to benefit from this investment opportunity and participate in the growth of Indian Infrastructure Sector.