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Over 11 MT FCI silos to be built via PPP

Officials say that upper ceiling for bidding by any single entity or consortium for construction of silos was 15% of the locations or the storage capacity.

FCI stores around 55 MT to 85 MT of rice and wheat at any given point of time. (File)
FCI stores around 55 MT to 85 MT of rice and wheat at any given point of time. (File)

In a bid to attract investment into India’s food grain storage infrastructure from big corporate entities, the food ministry has approved a policy which encourages the private players to bid for construction of 249 state-of-art silos with close to 11 million tonne (MT) wheat storage capacity for the Food Corporation of India (FCI).

The silos will be built across 12 states, including Punjab, Haryana, Madhya Pradesh, Maharashtra, Haryana and Kerala, over the next four to five years through the public-private partnership (PPP) model with an estimated investment of Rs 9,200 crore.

The FCI will use the silos for storage of wheat through a lease of thirty years with private entities. As per the tender document, fixed storage charges to be paid by the FCI to private entities based on a per tonne per year basis are the bidding parameters. This fixed charge escalates by 70% of the wholesale price index and 30% of the consumer price index.

Sources told FE that ‘through bundling of projects’ the food ministry has removed an earlier clause which used to restrict large private players or consortium from participating in bidding for a number of projects for construction of silos.

Officials say that upper ceiling for bidding by any single entity or consortium for construction of silos was 15% of the locations or the storage capacity.

Officials say that by allowing private players to bid for multiple projects would attract ‘serious’ investors into construction of silos in the country. Currently, the bid documents have been finalised for construction of silos by FCI and sent to the food ministry.

Based on the recommendation of a high-level committee for restructuring of FCI, chaired by former food minister Shanta Kumar, in 2014, an action plan for construction of 10 MT capacity wheat silos through private sector investment was approved by the food ministry in 2016.

So far, silos with more than 1.11 MT wheat storage capacity have been created in Punjab, Madhya Pradesh, Gujarat, Haryana, Bihar and Assam at 22 locations. Currently, 36 silos with 1.81 MT capacity is being constructed through PPP by 13 different bidders in Punjab, Haryana, Uttar Pradesh, Gujarat, Bihar and West Bengal.

For the first time, two rice silos with a combined storage capacity of 25,000 tonne are currently being built at Buxar and Kaimur in Bihar by private entities for FCI on a pilot basis.

Food ministry officials say that if food grains are stored in silos and transported in bulk, losses due to theft, pilferage and transportation would be negligible compared to the food grains stored in warehouses.

FCI stores around 55 MT to 85 MT of rice and wheat at any given point of time. Silos ensure better preservation of food grains and enhances its shelf-life.

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