State-run energy cos yet to spot ways to monetize assets

State-run oil and gas companies are yet to finalize alternative asset monetization plans after shelving their earlier plan to monetize oil and gas pipelines, two officials familiar with the matter said.

The companies are now exploring other options, including monetizing receivables, the people mentioned above said on condition of anonymity. The government, which agreed to shelve the pipeline plans, had asked the companies to prepare fresh plans by June-end.

Under the initial plan, oil and gas companies, Indian Oil Corp. Ltd (IOCL), Hindustan Petroleum Corp. Ltd (HPCL), and GAIL (India) Ltd, would transfer some of their pipelines to infrastructure investment trusts (InvITs) and sell stakes in the pipelines.

However, the companies told the ministry of petroleum and natural gas ministry that monetizing pipelines via InvITs would be expensive, after which the government agreed to shelve the plan. The companies said that with high credit ratings, they can raise capital easily and at a lower cost than what they would have to offer InvIT investors.

“It cannot be one size fits all,” said one of the two officials mentioned above. The InvIT model, which is beneficial for firms that can’t get loans or get loans for higher rates, would not be beneficial for oil marketing companies, the official said.

“In monetization, it is generally a potential resource that is monetized. CGD (city gas distribution) was a potential resource that we have done. They are monetizing blocks in E&P (exploration and production), that also we realized… The idea of asset monetization is that idle assets of a company should get some value,” the official said.

The government’s ambitious asset monetization plan was announced in last year’s Union budget to increase financial resources for the National Infrastructure Pipeline. The total indicative value of the monetization pipeline for core assets of the central government has been estimated at 6 trillion over FY22-25.

Oil and gas is a focus area for the Centre under its national monetization pipeline along with roads, railways, among others. Pipeline assets considered for monetization in FY22-25 have an aggregate length of 8,154 km, of which 7,928 km are from operational assets. Queries sent to the ministry of petroleum and natural gas, HPCL, GAIL and IOCL remained unanswered till press time.

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