To boost infrastructure investment in the country, the Union government is planning to set up a National Land Monetisation Corporation (NLMC) for land and non-core assets monetisation soon, sources told News18. This would help in monetising state-owned surplus land assets in a systematic way. The corporation will initially have Rs 5,000 crore authorised capital and at least Rs 150 crore share capital for subscription, according to sources.
The new entity will work as an asset manager for lands owned by the Union government and central public sector enterprises, according to previous media reports.
There will be a chief executive officer (CEO) and a technical team to facilitate land monetisation. The corporation will be allowed to raise capital from the equity market, based on the value of its leased assets, the report suggested.
There will members from senior officials of the finance ministry, department of public enterprises, ministry of housing and urban affairs and independent directors from finance, real estate industry in the corporation.
This new entity was required to work with the various government departments for land monetisation. Once the corporation is being formed, they will identify and manage surplus lands and assets through this special purpose vehicle (SPV).
During Budget 2021, Nirmala Sitharaman proposed to form an SPV. “Monetising of land can either be by way of direct sale or concession or by similar means. This requires special abilities and for this purpose,” finance minister had earlier said while proposing the new corporation.
The special purpose vehicle for monetising land and other surplus assets of public sector enterprises would be launched soon, department of investment and public asset management (DIPAM) secretary Tuhin Kanta Pandey earlier told at the Capital Market Conference organised by industry body FICCI.
The apex body could help in utilising land parcels for urban renewal and development projects in future, he added. The SPV is likely to operate on the fee-based model and may become a permanent entity to monetise land on regular basis. according to reports.
“I think that value can be discovered and unlocked if we demerge some land assets and actually look at it as a real estate, rather than as a part of an operating company," Pandey added, according to Business Today.
The corporation will also develop concession agreements for land development and sale, legal management of litigation/encumbrances, development planning, design and bid process management, the reports said earlier.
“Next 5-10 years would become a very big thing, because we have so far not started valuing land that we have. And a lot of land could be used for urban renewal..and good strategic land can be made available,” Pandey mentioned.
The government has identified 2,000 acres of land as part of non-core assets for MTNL, BSNL, BEML, HMT in the previous financial year, from which it expects to garner Rs 50,000 core from monetisation of land assets through redevelopment and sale.
The government also plans to amend the Airport Authority of India Act to allow commercial use of its land, according to a CNBC-TV18 report. The finance ministry is expected to gather around Rs 17,000 crore from the monetisation of IOC, GAIL, and HPCL pipelines, Rs 1.68 lakh crore from PowerGrid transmission network.
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