Empowered panel to decide on PPP for foodgrain storage soon

The Hindu Business Line - New Delhi, Sept. 8:  

The Empowered Group of Ministers (EGoM) will soon take a call on establishing modern storage capacity through public-private partnership (PPP). The plan is to immediately build a capacity of 2 million tonnes (mt) and 13 mt during the 12 {+t} {+h} Plan.

A senior government official told Business Line that, “Initial discussions are over. After the EGoM's decision, the process will begin.” Various estimates suggest that up to one-third of total foodgrain produce is wasted because of inadequate storage facilities.

The Finance Minister, Mr Pranab Mukherjee, has already approved inclusion of modern storage capacity under viability gap funding (VGF). Accordingly, the Government will provide VGF grant up to 20 per cent of the total project cost for setting up silos.

The private entity will be selected through competitive bidding. The Food Corporation of India may provide additional VGF up to 20 per cent in North Eastern region, the sources said.

There will be a two-stage selection process for the private entity. For 50,000 mt silo, the company should have experience of working in the infrastructure sector and net worth of Rs 25 crore. Additional weightage will be given for working in agro-based industry. The second stage will involve quoting lowest VGF.

Initially, the proposed facility will be used for wheat. According to latest Government estimates, wheat production is likely to touch 85.9 mt during 2010-11, over 5 mt more than last year.

According to the proposed framework, the FCI or State governments would procure wheat. It will be stored in surplus area initially (up to 6 months). It will then be transported to deficit or consuming states.

The private entity will be responsible for storing wheat in silos in consuming states. These entities will receive a recurring service charge from the authority. The framework said that the private entity would be responsible for development and maintenance of modern and temperature-controlled silos. They will also be required to arrange unloading, weighing, de-bagging, testing, drying, storing, re-bagging and dispatching wheat.

Shishir.s@thehindu.co.in