Is it true that oil companies like GAIL, BPCL, IOCL and HCPL will be looking at the INVIT structure to monetize their oil and gas properties?

Infrastructure Investment Trusts or INVITs have been in existence for some time in India. As of date, these INVITs have made their presence felt in road projects and power infrastructure as a means of asset monetization. It is for the first time that India now plans aggressive asset monetization of the oil and gas sector in India.

The government has disclosed that India’s oil sector PSUs will float INVITs as part of asset monetisation plans which were announced in Budget 2021 with an overall target of Rs.75,000 crore of funds to be raised. GAIL is expected to be the first off the block to set up the INVIT and the company proposes to house some of its gas pipeline infrastructure.

This INVIT is likely to help GAIL mobilise Rs.20,000 crore, which they can actually reinvest in developing new pipeline infrastructure in India. Apart from GAIL, Hindustan Petroleum will also look to monetize its pipeline infrastructure to raise money. In addition, IOCL is expected to monetize its hydrogen-producing units and product pipelines into a separate INVIT.

INVIT structures are created to hold income-generating infrastructure assets like roads, toll-ways, power transmission lines, gas pipelines etc, where the revenues can be easily segregated. INVITs are popular in the power sector where Power Grid Corporation has already monetized some of its assets through INVITs. Oil could be the next story.