Oil PSUs asked to come up with better asset monetization plans  

NEW DELHI : State-run oil and gas companies have been ordered back to the drawing board after failing to come up with “comprehensive” plans to monetize their assets.

Earlier this year, these marketing companies — HPCL, GAIL, and Indian Oil– told the petroleum ministry that monetizing assets such as oil and gas pipelines was not a viable proposition, arguing it was an expensive way to raise capital.

Following this, the government agreed to shelve the plan but told them to come up with alternatives within a month.

Two officials aware of the development said the ministry eventually received a few alternative proposals but did not find them comprehensive or practical and has now asked the companies to come up with “more comprehensive” proposals.

“When we move ahead, we will move ahead with some substantive things. There should be actual monetization. We are waiting. The companies have been asked to come up with decent proposals,” said one of the officials.

Other options looked at by the OMCs include monetization of receivables.

The second official said all the options are on the table, including the initially targeted InvIT model.

According to the initial plan, the oil and gas companies were to monetize some of their pipelines by creating separate InvITs and sell stakes in those pipelines.

Queries sent to the petroleum ministry, HPCL, GAIL and Indian Oil remained unanswered till press time.

On the rationale behind not preferring the InvIT model of asset monetization, the first official said: “Everything has its pros and cons. At one particular point of time when the companies have easy access to cheap financing, InvITs were not very lucrative. In the case of NHAI, it does not get cheap finances, risk is higher and there finances are costly, so for them InvIT is very lucrative, because it gives them finance at better rates.”

The official, however noted that the companies may eventually opt for the InvIT model if access to cheaper finance gets tougher.


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