Wheat storage: Need FCI guarantee for rent of unused silos, state tells Centre

CHANDIGARH: Punjab government has sought guarantee from the Union government to pay the committed rent of storage space that would remain unused in steel silos built to keep wheat. The reiteration of the longstanding demand came when cabinet secretary PK Sinha held a video call with representatives of states to take feedback on construction of silos on Wednesday.

To be built by private players, with states committing to a minimum rent for a certain number of years, 100 lakh tonnes of silo capacity has been sanctioned for the country, of which 17.5 lakh tonnes was allocated to Punjab in 2014.

“We need the guarantee from Food Corporation of India before we build the silos in public-private partnership (PPP) mode,” said Punjab’s principal secretary, food and civil supplies, KAP Sinha in the meeting, adding, “The state’s concerns are about who would bear the cost of unused capacity.”

The FCI has not given a clear reply to the state government’s requests so far. The central agency, which drives India’s public distribution system, says the matter was examined by a high-level committee headed by its chairman.

The Centre wants wheat-producing states to build silos as the shelf life of wheat in them is at least three years, whereas covered godowns and covered area plinths (in open spaces) can keep the grain safe for one to two years.

In the state, 65 lakh tonne of this season’s wheat is stored by covering at plinths, technically called CAP storage.

As per prevailing charges, annual storage cost for 50,000 tonnes of wheat will be Rs 42 lakh, with a steel silo project of this capacity costing Rs 30 crore to build. The 32 locations identified for the silos include Mansa, Kapurthala, Faridkot, Sirhind, Jalandhar and Barnala. Some will have 50,000-tonne and others will have 1 lakh-tonne capacity. In 2015, during the SAD-BJP regime, Pungrain, one of the six procurement agencies in the state, signed an agreement to use the entire space (once it gets ready) for 30 years, with the companies who successfully bid to build the silos.

The Congress government, which took power last year, has underlined that the state is passing through a financial crunch and thus wants to reduce capital expenditure.

“The storage rates are increasing every year, so we don’t want to take the entire burden on us,” said a department officer who has been part of the discussions. The Central Warehousing Corporation fixes the rates for silos — last year it was Rs 7.4 per quintal per year, and in the current year it’s Rs 8.3.

“We accept what the Centre says, but our only concern is: who will take guarantee for the space that goes vacant?” said the state’s food and civil supplies minister, Bharat Bhushan Ashu. Issues concerning foodgrain storage will be thrashed out on Friday when the chief minister has called a meeting, he added.

The 2015 agreement was signed with nine companies, including sector leaders Adani and LT Foods. If things don’t work out, the state may scrap the project and plan for its storage needs again, officials told HT.