FCI to build 3.4 MT wheat silos under PPP mode in next 18 months
By Sandip Das
The Food Corporation of India (FCI) is aiming to construct wheat silos with combined capacity of 3.4 million tonne (MT) across the country in the next one and half years, under the public private partnership (PPP) model.
Sources told FE that contracts for the construction of these silos have been awarded to private entities including Adani Agri Logistics and KCC Infrastructure.
“Bids for another 3 MT silos construction to be constructed in the next three years has been called,” a food ministry official said. In the last couple of years under PPP mode, 2 MT wheat silos capacity has been already constructed.
Estimated cost of construction of 1 MT silos is around Rs 1000 crore. Silos are sub-mandi yards, which could bring ease of procurement of grains for farmers and lead to significant reduction in logistical costs.
This is part of a Rs 11,000-crore project to build wheat silos with 11 MT of capacity during the next four years under the PPP mode. These silos will be spread around 250 locations across Punjab, Haryana, Madhya Pradesh, Uttar Pradesh, Rajasthan, Gujarat, Maharashtra, Bihar, West Bengal, Jammu, Uttarakhand and Kerala.
Currently, the silos are being built under the design, build, fund, own and transfer (DBFOT) mode, under which the land is owned by the FCI and via the design, build, fund, own and operate (DBFOO) model, under which land belongs to private entities.
The corporation will use these silos for storage of wheat through a lease of 30 years with private entities. 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. In 2005, under a pilot project to modernise storage infrastructure, construction of 0.5 MT of storage capacity under the build, own and operate (BOO) model was carried out by Adani Agri Logistics.
On recommendation of a high-level committee chaired by former food minister Shanta Kumar in 2015, construction of silos with railway sidings commenced. Then the food ministry approved a ‘hub and spoke’ model because of challenges faced in land acquisition for railway sidings.
In addition, the FCI has stopped the earlier practice of keeping wheat in temporary storage facilities such as cover and plinth (CAP) for avoiding any storage losses and better preservation of foodgrains.
The FCI stores on an average 40 – 50 MT of rice and wheat on an average for ensuring supplies to beneficiaries under the National Food Security Act. 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.