The Hindu Business Line : Silo project process gathers pace — Govt to spell out requirements to bidders next week

THE process for construction of bulk silos for storage of wheat and rice has gathered pace with the seven shortlisted firms being issued request for proposal (RFP) documents.

"The shortlisted firms were issued the RFP at a meeting called by the Food Ministry last week. The Government will provide these firms with exact details of its requirement next week," official sources told Business Line.

Once the Government, after consulting the Food Corporation of India (FCI), gives details of its requirement, the interested firms will provide details of how they will go about executing the project, according to the sources.

The meeting with the shortlisted firms was held last week after being postponed twice due to "unavoidable" circumstances.

The project should have been in full swing now but it has been delayed as a lot of time was consumed to work the cost-benefit analysis. Over 10 firms had initially bid to execute the project out of which seven were shortlisted. The bidders, identified in mid-2002, were expected to submit their request for proposal (RFP) by September 2002 to be followed by the technical and financial bids.

This was to be finally followed by the issue of letter of intent and signing of the concession agreement with the selected investor.

Reliance, Escorts, the Adani Group and Aban Loyd are among those reportedly shortlisted for the project.

The 18-lakh tonne silo project is to help FCI in bulk foodgrain handling, storage and transport.

The project envisages private investors to build, own and operate infrastructure for bulk handling, storage and transportation of wheat procured by FCI.

Under the proposed scheme, FCI will continue to be the nodal agency for procurement of foodgrains from farmers for the central pool.

Private participation is being solicited at the level of handling, storage and transportation of grains in bulk form.

Firms investing in the project will be offered sops such as FCI guaranteeing compensation for utilisation of 100 per cent capacity of the assets for the first 10 years and 75 per cent capacity for the next 10 years.

This is apart from a five-year tax holiday and 30 per cent deduction of profits for the next five years.

The Government has identified nine locations for creation of fully automated bulk grain handling and storage terminals, of which four are to be set up as `base depots' of three-lakh tonne (lt) capacity each in Barnala and Moga (Punjab) and Sirsa and Kaithal (Haryana).

The remaining five `field depots' are to be located in consuming areas, including New Mumbai (two lt), Chennai, Coimbatore, Bangalore and Hooghly (one lt each).

The identified locations have, in turn, been grouped into two independent circuits. The first circuit comprises two base depots (Barnala and Moga) and three field depots (Chennai, Coimbatore and Bangalore), with the second linking the Sirsa and Kaithal base depots with the New Mumbai and Hooghly field depots.

The prospective investors are required to bid for an entire integrated circuit — i.e., either Circuit No. 1 or Circuit No. 2, or both — rather than for just one or two isolated depots.

In addition, they will also have to put in place the necessary rail infrastructure for transporting the grains from the base to the field depots.

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