The Cabinet Committee on Economic Affairs, chaired by PM Narendra Modi, in a path breaking reform, has approved monetisation of assets of Power Grid 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 and using the proceeds to fund the new and under-construction capital projects.
This approval would help Power Grid to monetise in the first lot, assets with gross block value of more than 7,000 crore. These assets, which are mainly High Voltage Transmission lines and substations, are held by Power Grid in form of Special Purpose Vehicles (SPVs). The proceeds from the asset monetization would be deployed by Power Grid in their new and under-construction projects. Based on the experience gained, further monetization shall be carried out in future.
The Cabinet Committee on Economic Affairs has accorded approval to the Power Grid to monetise transmission assets held in SPVs through InvIT model. The asset monetisation through InvIT by Power Grid is a first for the Power Sector PSU. The proceeds from the asset monetization would be utilized by Power Grid for its CAPEX and the premium generated would augment the net worth of Power Grid.
The CAPEX plan of Power Grid 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 Power Grid would deepen this market. The InvIT would provide an opportunity to the general public and institutional investors such as Pension Funds, Mutual Funds, to benefit from this investment opportunity and participate in the growth of Indian Infrastructure Sector.
