FCI optimistic of adding at least 0.44 mt capacity by March.
The revised and more liberal Private Entrepreneur Guarantee (PEG) scheme, launched in August by the Food Corporation of India (FCI), has been successful in getting better responses from private companies.
The earlier scheme, in which FCI provided a seven-year lease period guarantee, later revised to 10 years, had not been successful in drawing private players, particularly in Punjab and Haryana.
In Haryana, fresh bids were opened on September 17 and 467 tenders, for 12 million tonnes, were received by the state. Of these, storage capacity of 3.9 million tonnes has been sanctioned, while investigations are on for the rest.
In Punjab, where tenders were opened on July 29, the state-nominated agency has received 532 offers for 10.1 million tonnes and 311 sites are currently being investigated by the state for final sanctions.
In its previous structure, the scheme had drawn a lukewarm response from private players, particularly in these two states, due to high land prices and stringent land requirements. Private players had said extension of the guarantee period was required to offset the exorbitant land cost in the states.
Under the new guidelines, the land required to set up a warehouse has been relaxed from three acres to two acres for the first 5,000 tonnes, while for an additional 5,000 tonnes, it has been revised from 2 acres to 1.7 acres. Moreover, private entities with land on lease can also apply under the new guidelines.
Under the earlier guidelines for the scheme, Haryana had managed tenders for 4.3 million tonnes in 3-4 months, while Punjab had managed tenders of only 5.13 million tonnes before the scheme was scrapped and new tenders invited.
FCI’s high-level committee (HLC) has approved the creation of storage space of 15.8 million tonnes under the scheme in 19 states, a majority of which has to be created in Punjab, Haryana, Andhra Pradesh, Maharashtra and Tamil Nadu.
Tenders have been invited in 14 states till now for a total capacity of 13.7 million tonnes. Currently, tenders for 0.22 million tonnes are in various stages of evaluation.
FCI expects that by the end of the ongoing financial year, around 0.44 million tonnes of storage space under the scheme, spread across Tamil Nadu, Punjab, Haryana, Maharashtra and Chhattisgarh, will be ready for operations.
In addition to this, Central Warehousing Corporation is also in the process of adding 300,000 tonnes of storage capacity in different states by March 31, 2011, after having added 97,000 tonnes capacity during the current year.
The urgency to revamp the scheme was catalysed by the heavy criticism of the government’s inadequate storage capacities and high level of procurement, which had led to wastage of around 50,000 million tonnes of foodgrain due to excessive rains recently.
The new storage capacities will ease the pressure on government stock, currently 118 per cent above the buffer stock norm, and make space for the arrival from the kharif and rabi procurement this year.
