FCI to use land pool to attract private investment in storage infrastructure

To bring in efficiency in its asset utilisation, the Food Corporation of India (FCI) is planning to create additional modern storage facilities using its ‘land pool’ by attractive private sector investment.

Sources told FE that additional storage facilities creation would reduce FCI’s dependence on hired godowns from private entities for storing foodgrains. Currently, out of FCI’s 80 million tonne (mt) of grain storage facilities, 35 mt is hired from private entities.

The FCI owns several assets which are primarily used for conventional storage facilities of keeping foodgrains. Sources said that these ‘land parcels’ could be offered to the private sector for redevelopment and monetisation through creation of additional storage facilities.

The corporation in collaboration with state agencies handles around 80-100 mt foodgrains annually. Around 60 MT of mostly wheat and rice are allocated for distribution to more than 80 crore beneficiaries under the National Food Security Act annually.

According to food ministry sources, additional storage creation is expected to attract investment of around Rs 2,600 crore in the next couple of years while the corporation has identified around 200 storage facilities which have potential for modern storage development.

In a communication in March, 2021, the ministry of consumer affairs, food and public distribution, has proposed an asset monetisation for 7,000 acres and 3,500 acres of land held with FCI and Central Warehousing Corporation (CWC) in the next three years. The proposed asset modernisation would cover grain storage facilities of 17.5 mt of FCI and 3.4 mt of CWC.

In case of those storage facilities where augmentation of storage is not required, FCI has identified around 14 locations which have the potential to offer an additional 0.33 mt of warehousing capacity for alternative use. Officials said that alternate use of storage facilities could be used for cold storage, e-commerce, B2B & B2C warehousing and storage of fertilizers, industrial goods, etc.

On April 1, FCI and state agencies had had more than 50 MT of rice and wheat against the buffer norm of 21.04 MT.

Meanwhile, in a bid to attract investment of corporate entities in foodgrain storage infrastructure, the food ministry has approved a policy which encourages the private players to bid for multiple projects for construction of 249 state of art silos with close to 11 million tonne (MT) wheat storage capacity for FCI.

The silos will be built across 12 states including Punjab, Haryana, Madhya Pradesh, Maharashtra and Kerala over the next four to five years through 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.