InvestorQ : Can you tell me about the Rs75,000 crore that government plans to raise from coal monetization?
sarah Leo made post

Can you tell me about the Rs75,000 crore that government plans to raise from coal monetization?

Rashi Mehra answered.
12 months ago

In the last few weeks, there have been several setbacks for the disinvestment program of the government. Firstly, the LIC listing has been tepid and the stock is more than 20% below the issue price. Also the government has put off its BPCL sale in the back burner. Even the sale of Hindustan Zinc stake may not fetch a good price with the current sentiments surrounding metal and mining stocks. The only option for the government then was to focus more on the monetization of key infrastructure assets.

That is what the government has done. In FY23, the government plans to monetise assets worth Rs75,220 crore in the coal mining sector alone. Out of this overall plan nearly Rs52,200 crore will come from monetization of coal blocks. It will also generate Rs20,320 crore from the MDO projects. In addition, another Rs2,000 crore from discontinued mines and Rs700 crore from monetization of coal washeries will also be taken up in FY23.

In FY22 government earned revenues of Rs40,090 crore from coal monetization. That is more than 10 times the target in the Union Budget. Hence, if the government is serious, then Rs75,220 crore may not be too tough in FY23. Coal monetization can easily bridge the gap left by other sources falling short. In FY22, a total of 39 coal blocks were taken up for monetisation in order to boost the government coffers and all were successful.

In fact, the National Monetization Pipeline (NMP) envisages a total of 160 coal mining assets being monetized between fiscal years FY22 and FY25. In total, 761 mineral blocks are expected to be put on auction during FY22 and FY25 as part of the NMP plan. Obviously, there is a lot of value hidden in the infrastructure sectors like coal mining, roads, railways, power infrastructure etc. Clearly, coal is doing its job quite effectively.