Convincing the petroleum ministry by stating the plan as an expensive way to raise capital, state gas utility GAIL, Hindustan Petroleum, and Indian Oil Corporation may not go ahead with pipeline monetisation, a media report said on Wednesday.
According to the Economic Times report, the government expected the companies to transfer some of their pipelines to separate infrastructure investment trusts (InvITs) and sell minority stakes in those to raise Rs 17,000 crore.
The oil companies have told the government that their high credit ratings, among the best in the country, will allow them to raise capital easily and at a much lower cost than any return they would have to offer InvIT investors, the report added.
The asset monetisation programme, announced in Budget 2021, is a pipeline of assets the government is looking to monetise to collect about Rs 6 trillion to partly fund its ambitious infrastructure projects over four years ending 2024-25.
Finance Minister Nirmala Sitharaman while announcing the plan said it’s important that India recognises the time has come for making the most out of our assets.
The plan includes petroleum product pipelines of 3,930 km to be monetised by Indian Oil Corporation, Hindustan Petroleum Corporation and the Ministry of Petroleum and Natural Gas.
“The pipeline monetisation plan is no more on the table,” Economic Times quoted a person in the know.
As per report, the oil and gas companies had resisted the idea from the beginning as pipelines are core to their business and the InvIT model being not so attractive for them.
For the oil companies, InvIT would have been a trade-off between current and future cash flows as the stake sale would yield capital but they would start paying an operating charge for using the assets.
The government now is debating whether these pipelines can be managed by a third party or shared, it added.
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