Cabinet nod to SPV for monetisation of surplus land

The Union Cabinet on Wednesday approved creating a new company to hold and monetize surplus land and buildings of government agencies and PSUs that are being privatized or being shut down.

New Delhi: The Union Cabinet on Wednesday approved creating a new company to hold and monetize surplus land and buildings of government agencies and PSUs that are being privatized or being shut down. The special purpose vehicle (SPV) called the National Land Monetisation Corporation (NLMC) will be set up as a wholly-owned Government of India company with an initial authorized share capital of Rs 5,000 crore and paid-up share capital of Rs 150 crore, an official statement said.

"NLMC will undertake monetization of surplus land and building assets of Central Public Sector Enterprises (CPSEs) and other government agencies," it said. With the monetization of non-core assets, the government would be able to generate substantial revenues by monetizing unused and under-used assets, it said. The government has in recent months spoken of asset monetization as means of not just revenue generation but also boosting economic activity as Asia's third-largest economy emerges from the pandemic.

Asset monetization is the process of creating new sources of revenue for the government and its entities by unlocking the economic value of unutilized or underutilized public assets. "At present, CPSEs hold considerable surplus, unused and underused non-core assets in the nature of land and buildings. "For CPSEs undergoing strategic disinvestment or closure, monetization of these surplus land and non-core assets is important to unlock their value. NLMC will support and undertake monetization of these assets," the statement said.

This will also enable productive utilization of these under-utilized assets to trigger private sector investments, new economic activities, boost the local economy and generate financial resources for economic and social infrastructure. The statement, however, did not detail the modalities of transferring the surplus land and buildings to NLMC. NLMC will hire professionals from the private sector just as in the case of similar specialised government companies like the National Investment and Infrastructure Fund (NIIF) and Invest India, the statement said, adding that this was considering that real estate monetisation requires specialised skills and expertise in areas such as market research, legal due diligence, valuation, master planning, investment banking and land management.

The new company, which will be set up under the administrative jurisdiction of the finance ministry, will be a lean organization with minimal full-time staff, hired directly from the market on a contract basis. "Flexibility will be provided to the Board of NLMC to hire, pay and retain experienced professionals from the private sector," it said. NLMC is expected to own, hold, manage and monetize surplus land and building assets of CPSEs under closure and the surplus non-core land assets of government-owned CPSEs under strategic disinvestment.

"This will speed up the closure process of CPSEs and smoothen the strategic disinvestment process of Government-owned CPSEs," the statement said, adding that "these assets may be transferred to NLMC to hold, manage and monetize these assets." NLMC will also advise and support other government entities (including CPSEs) in identifying their surplus non-core assets and monetizing them in a professional and efficient manner to generate maximum value realization. In these cases (e.g., ongoing CPSEs and listed CPSEs under strategic disinvestment), NLMC will undertake surplus land asset monetization as an agency function. It is expected that NLMC will act as a repository of best practices in land monetization, assist and provide technical advice to the government in the implementation of the asset monetization programme.

"NLMC will have necessary technical expertise to professionally manage and monetize land assets on behalf of CPSEs and other government agencies," it said. The Board of Directors of NLMC will comprise senior Central Government officers and eminent experts to enable professional operations and management of the company. The chairman, non-government directors of the NLMC will be appointed through a merit-based selection process.

PTI