It’s here! The biggest auction in Indian history …

On August 23, Minister of Finance Nirmala Sitharaman present the bold details of the National Monetization Pipeline (NMP) to the country. Note the wording – this is a “pipeline”, which is likely to deliver something somewhere.

The announcement was received with delirious applause from the big business of the country, and the West. It was made clear by the Minister of Finance that although the idea was inspired by “the vision of our honorable Prime Minister”, extensive consultations have taken place with all departments, and careful thought has been devoted to it. There was a task force, which submitted a report in 2019, and then there was the guiding vision set out in the 2021-2022 budget, presented earlier this year. Thus, the whole had “impeccable” references.

For most people in the country, however, NPM is a nebulous plan although its scale appears to be impressive. Let’s take a look at what NMP is first.

Rent existing infrastructure

India has enormous physical infrastructure of all kinds, the scaffolding on which the economy spins. This includes roads and bridges, railway system, power generation and transmission system, telecommunications network, gas pipelines, airports, ports, mines, warehouses, urban real estate, stadiums. sportsmen, etc. Most of them have been built over the past 75 years, using government money, which is money the government collects from the people through taxes. So, in fact, it is the property of all, used to serve the people.

What the Narendra Modi government is doing is leasing all of this to corporations for a certain payment. The currently announced phase is for the next four years, 2022-25. As the PNM documents stress, they are all well established structures, fully functional (‘brownfield’) and with virtually no risk of loss for those who rent them.

The government, like a real salesman, has given the estimated values for leased infrastructure. This amounts to Rs. 6 lakh crore which seems like an impressive amount, but there are wheels in the wheels as we will see.

The graphic below has been released by the government, carefully summarizing the items in the “Big Sale” with their estimated values:

All of the above assets are in what are called “core” sectors. In addition to these, there are also “non-core” sectors, which are likely to come up for sale in the coming years.

At present, two are named – the land and the buildings. It might seem trivial, but imagine how much land and how many buildings the government owns. It is mind boggling.

The government estimates that only about 14% of its assets in “basic” sectors are put into “pipeline”. In the fullness of time, more will go.

What is the logic?

The government has argued that the money that will be raised by renting these infrastructure goodies to private actors will be used to create new infrastructure. It presents examples of countries, such as Australia, etc., where specific types of infrastructure have been leased in the same way.

What the Modi government does not reveal is the other side of the story: what will the private parties who lease the infrastructure do, how will they manage it? It goes without saying that private actors are not charitable institutions, serving good for free. They will rent lucrative infrastructure and try to make a profit from it. So how does it work ?

The idea, underestimated throughout government promotional material, is that they will earn money from the people who use the services. Take the example of the railways, as the story goes NITI Aayog documents.

A total of Rs. 1,52,496 crore is the estimated value that will be charged for the rental:

The most lucrative stations and trains are to be privatized via NMP. As the documentation indicates, the 10 stations for which a “supply” has been initiated include New Delhi, Mumbai CST, Nagpur, Amritsar, Tirupati, Dehradun, Gwalior, Sabarmati, Nellore and Puducherry. Likewise, the passenger train clusters to be privatized include Mumbai (1 and 2), Delhi (1 and 2), Chandigarh, Howrah, Patna, Prayagraj, Secunderabad, Jaipur, Chennai and Bengaluru.

Likewise, for all other railway infrastructures, the most profitable and profitable ones will be leased. The trains will be leased for 35 years. The range of different leases can extend up to 99 years.

Obviously, those who pay for the rental of these stations and trains, etc., will charge the millions of users of these trains. Since they will be the sole arbiters of what to charge and how to run things, they will certainly increase costs for everything from entry into stations to travel fares or the various facilities available at stations. or on trains.

Very low prices charged

There is another aspect of this clearance sale that is perhaps the most shocking: the costs estimated by the government are at their lowest. Maybe this is done to attract big business and sweeten the deal for them. Many of the Modi government’s divestment plans have failed because no buyers were ready. So, to anticipate such an eventuality, the costs are already in the basement. Let us take a few examples.

About 50% of the existing pipeline will be leased under the NMP. This represents approximately 8,154 km of pipeline. He was valued that it costs around Rs.6 crore to build one kilometer of gas pipeline. Thus, the capital cost of building 8,154 km would have been around Rs. 48,924 crores. It was hard-earned money from the people by the government. But this pipeline is now being re-leased for just Rs. 26,642 crore.

In addition, the tariff for transporting gas through this pipeline is currently regulated by the Petroleum and Natural Gas Regulatory Council. It will come out the window and the business house that leases the pipeline will start charging rates that will earn it a big profit. Consumers will therefore end up paying more for gas.

Likewise, the Ministry of Road Transport and Highways had would have estimated in 2019, that the cost of building a four-lane highway would be around Rs.30 crore per kilometer. Thus, for the 26,700 km rented under the NMP, the cost would have been around Rs. 8 lakh crore. But this is privatized for a sum of only Rs.1.6 lakh crore!

Private commercial houses that lease the highway under NMP will surely charge high tolls to increase their profits in the coming days. Once again, it is the highway users who will have to pay for this largesse.

The “pipeline” thus delivers many things at once: it will bring in huge profits for big companies, money in government coffers without taxing the rich and increased spending for ordinary citizens, who will ultimately finance this loot. .

Source link

About Keith Tatum

Check Also

Planned gas-liquid complex in Trenton beneficial for natural gas capacity issues

WILLISTON, ND – Governor Doug Burgum and the Department of Commerce announced on Wednesday that …

Leave a Reply

Your email address will not be published. Required fields are marked *