The government on Wednesday notified the creation of the National Land Monetisation Corporation (NLMC), a government wholly-owned entity that will undertake monetisation of the surplus land and building assets of central public sector enterprises (CPSEs) and other government agencies. This special purpose vehicle (SPV) has been created in pursuance of the Budget 2021-22 announcement.
Currently, CPSEs hold considerable surplus, unused and under used non-core assets in the nature of land and buildings. For CPSEs undergoing strategic disinvestment or closure, monetisation of these surplus land and non-core assets is important to unlock their value.
According to the Economic Survey 2021-22, CPSEs have put nearly 3,400 acres of land for potential monetisation. The railways and defence industries have the largest holdings of land.
NLMC will support and undertake monetisation of these assets. This will also enable productive utilisation of these under-utilised assets to trigger private sector investments, new economic activities, boost local economy and generate financial resources for economic and social infrastructure.
The Cabinet, chaired by Prime Minister Narendra Modi, had on March 9 approved NLMC as a wholly-owned Government of India company and it falls under the administrative jurisdiction of the finance ministry. It will have an initial authorised share capital of Rs 5,000 crore and a paid-up capital of Rs 150 crore.
NLMC will own, hold, manage and monetise surplus land and building assets of CPSEs under closure and the surplus non-core land assets of the government-owned CPSEs under strategic disinvestment. This will speed up the closure process of CPSEs and smoothen the strategic disinvestment process of the government-owned CPSEs.
“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., on-going 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 Government in implementation of asset monetization programme,” the finance ministry had said in March.
NLMC will have necessary technical expertise. Its board of directors will comprise senior central government officers and eminent experts to enable professional operations and management of the company. The chairman and non-government directors of NLMC will be appointed through a merit-based selection process.
Professionals from the private sector will also be hired in NLMC with expertise in real estate market research, legal due diligence, valuation, master planning, investment banking, land management. This is similar to other specialised government companies like National Investment and Infrastructure Fund (NIIF) and Invest India.
NLMC will be a lean organisation with minimal full-time staff, hired directly from the market on contract basis. Flexibility will be provided to the Board of NLMC to hire, pay and retain experienced professionals from the private sector, the finance ministry has said earlier.
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