FCI floats tender for 2.47 million tonne of wheat silos via PPP model

The Food Corporation of India (FCI) on Thursday floated a tender to build 2.47 million tonne (MT) capacity silos across 66 locations by the private sector under the design, build, finance, own and operate model.

Sources told FE that estimated private investment in building these silos over the next two years will be around Rs 2,500 crore.

Silos with 1.8 MT capacity for 20 locations in Punjab; 720,000 tonne for 24 locations in Bihar, Uttar Pradesh and West Bengal; and 660,000 tonne capacity for 18 locations in Gujarat, Haryana, Jammu and Madhya Pradesh are being planned by the FCI.

The FCI will use the silos for storage of wheat through a lease of thirty 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.

Currently, around 2.8 MT capacity silos are under various stages of construction through private sector investment and the corporation aims to build close to 11 MT of silos capacity for storing wheat in the next four to five years.

Earlier this year, 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 MT wheat storage capacity for the FCI. The silos are being built across 12 states, including Punjab, Haryana, Madhya Pradesh, Maharashtra, Haryana and Kerala, through the public-private partnership (PPP) model with a total estimated investment of Rs 9,200 crore.

Sources said 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.

As part of a pilot initiative, 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.

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.

Meanwhile, in a major initiative to eliminate storage losses of foodgrains, FCI will discontinue the practice of storing wheat in uncovered facilities from September this year to augment covered storage facilities and ensure direct transfer of grains from procurement centres to the states for public distribution.
FCI stores around 50 MT to 60 MT of rice and wheat at any given point of time. Silos ensure better preservation of foodgrains and enhances the shelf life.