Govt to rope in private sector to set up silos with capacity of 2 million tonne

Written by Sandip Das | New Delhi | Updated: Feb 7 2012, 06:54am hrs
The government has decided to rope in the private sector to set up silos of a total capacity of 2 million tonne (mt) to augment grain storage.

The silos will be set up in the with the Planning Commissions assistance.

Food minister KV Thomas told FE that besides creating additional storage capacity for the Food Corporation of India (FCI), the silos would use state-of-the-art technology. The silos would be built on the basis of a

report submitted by global consultancy firm Mott MacDonald to the Planning Commission.

Official sources said the silos would be set up under the build-own-operate (BOO) model.

The scheme would be discussed at the meeting of an empowered group of ministers (EGoM) on Tuesday.

In a pilot project, FCI had entered into a BOO agreement for 20 years with Adani AgriLogistics, an arm of the of Adani Group, for setting up two silos with a capacity of more than 500,000 tonne at Moga in Punjab and Kaithal in Haryana in 2005. The company has since invested R650 crore for building the two base-silos and five field depots (at Chennai, Coimbatore, Bangalore, Navi Mumbai and Hooghly).

Official sources said Mott MacDonald was appointed by a committee headed by Planning Commission member Abhijit Sen. The feasibility report by the consultancy firm has covered factors such as comparative costs between conventional storage facilities and silos, locations of setting up silos and tendering process to be adopted for creation of these grainstorage facilities.

The government is expected to provide a viability gap funding of up to 20% of the capital cost of a silo and any expenditure beyond this would be funded by FCI.

Mainly because of bumper grain output during the last few years, the government has been keeping more grain than required under the strategic reserve and buffer stocks norm.

For augmenting grain storage, FCI and the Central Warehousing Corporation are in the process of building 15 mt capacities over the next five years. During the current fiscal, FCI would create an additional 3 million tonne capacity.

FCI procures and distributes grain under the targeted public distribution system and maintains buffer stocks and strategic reserves. It has a capacity of 61 mt, which includes 18 mt of CAP (cover and plinth) capacity that cant keep the grains intact for more than a few weeks.