FCI proposes storage space expansion with private participation

FCI proposes storage space expansion with private participation

Silos to be built for a total storage capacity of 20 mn metric tone

Anindita Dey | Mumbai April 16, 2015

The Food Corporation of India ( FCI ) has come up with comprehensive proposal to expand its storage base with private sector participation.

To be built on Design-Build -Finance-Operate -Transfer (DBFOT) basis, FCI proposes to build silos which is a sheet metal structure instead of concrete structure at present.

These silos to be built for a total storage capacity of 20 million metric tone (MMT), will be prepared both for rice and wheat and the locations will be prioritised as per demand and supply of food grains.

In the first phase, the silos will be built with private sector participation with the scope of viability gap funding ( VGF) by the government- VGF model. After certain period, the private participation will be without VGF or non VGF model.

The empowered group of ministers have already approved the VGF model under which land is made available by all warehousing entities like Food Corporation of India ( FCI), Central Warehousing Corporation ( CWC), State Warehousing Corporation ( SWC), state governments or central government or central government agencies.

The feasibility studies for wheat silos have been completed for 11 locations for electronic tenders are to be floated this month- April 2015. There are 82 more locations where feasibility study is underway and this is proposed to be completed by May 2015 so that tenders will be floated by June 2015.

In order to make the siols commercially viable further, FCI proposes to declare these base depots as notified market yards where the farmers could deliver in bulk.

These silos will have high tech preservation techniques, real time monitoring of grains to check the grain temperature and infestation. Besdies, these compleses will incorporate transportation and delivery of food grains in bulk, bagged form to filed depots without loss, damage and degradation in quality.

The private partner will recover the capital investment and operation and maintenance charges from the storage user charges to be fixed by the FCI. With basic capacity of silos fixed at 25,000 MT and onwards, the basic land infrastructure to be provided by FCI includes railway siding for bulk loading and unloading facilities. Under VGF model, 20% of financial support will be given by government of India.

Under VGF model, there is also another proposal to build silos with private freight terminals. In this case, if the private investor owns land with proximity to private freight terminals, the FCI will take up the responsibility for building the silos for grain storage. In this modela, FCI will give the guaranteed capacity and also pay rent to the investors. However this proposal is under consideration.

VGF model will be adopted till FCI completely phases out the cover and plinth model that is present concrete structure and once that is done, non VGF model is proposed to come into play. As per the non VGF model, the public private partnership mode to be pursued will be design, build,finance, oprate and own (DBFOO).

The private investor will provide land, build silos, provide storage, preservation and handling services in the silo complex and the project will be completely financed by the private party. Minimum land needed for such project will be 11 acres for 50,000 metric tonne storage.

Payments to the private party are to be made on the basis of making available the required capacity through fixed charges, variable charges and loading and unloading charges.





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