Plan for railways asset monetisation didn't attract enough investors: Kant

The government's plan to monetise railway assets by allowing private players to run trains did not attract enough investors due to lack of proper structuring and the railway ministry is looking at it afresh, NITI Aayog CEO Amitabh Kant said on Friday.

Kant said the private sector will come to invest only if there are assured returns.

"Therefore good project structuring is the key to success of any asset monetisation deal. Obviously, the railways trains project was not well structured, it did not attract good private sector participants. On the top of that, IRCTC was also bidding for railway trains.

 

"They lacked a good amount of structuring and therefore both the railway trains and the railway stations are being re-looked at, re-examined by the railway ministry and by the railway minister and they will take a call now how to go about it and what should be the model for that. It is being deliberated by the new minister," Kant added.

He was speaking at the seventh National Conference on Economics of Competition Law, 2022, held virtually.

Talking about the government's asset monetisation pipeline worth Rs 6 lakh crore, he said all the assets under the pipeline have potential for revenue generation.

"All the Rs 6 lakh crore assets that are listed down in the asset monetisation pipeline, are all assets which have revenue generating possibility and it needs to be well structured and it can easily attract investors into these brownfield assets. These are assets where revenue streams are already flowing in.

"If the projects are not well structured, you will not get the right bidders, you will not get the right value, you will not serve the interest of the country," Kant noted.

Speaking at the conference, Department of Investment and Public Asset Management (DIPAM) Secretary Tuhin Kanta Pandey said the policy announced in February 2021 for public sector enterprises is now the guiding policy for divestment.

As per the policy, the government will have bare minimum presence in broad strategic areas.

"Which means that if we have existing enterprises, in those areas we will retain them as a bare minimum presence. Now the word is bare minimum, which means basically the intention is to divest...but actually in those strategic areas you might retain a few and rest of them will either be privatised or subsidiarised or merged or even closed," Pandey said.

In non-strategic areas, he said either the government will subsidiarise the enterprises or if not feasible, they will be closed down.

On change in ownership, he said when control is shifted to the private sector, there may be many good consequences as it can have better capital infusion, management practices and technology.

"We are talking of industry 4.0 now, so it requires a very, very dynamic decision making which the government, having multifarious responsibilities, would not be in a position to actually do...," Pandey said.