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Tuesday, Feb 19, 2002

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Agri-Biz & Commodities - Foodgrains

Silo deadline extended

M.R. Subramani
Harish Damodaran

`What the investors are not sure about is the very value of a guarantee from FCI.'

NEW DELHI, Feb. 18

THE Government has extended the last date for inviting expression of interest (EoI) from private parties for being short-listed as prospective bidders for the Food Corporation of India's (FCI) bulk foodgrain handling, storage and transport project.

``The deadline for submission of the request for qualification (RFQ) was slated to expire today. But following requests from many bidders, we have asked RITES Ltd (the public sector consultancy which has invited the bids on FCI's behalf) to extend the last date to March 31'', officials in the Ministry of Consumer Affairs, Food and Public Distribution, told Business Line.

The officials said the bidders had sought clarification on a host of issues pertaining to the project, which 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 basically at the level of handling, storage and transportation of the grain in bulk form, once it leaves the mandis. To make this an attractive proposition, the investors have been given 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.

"What the investors are not sure about is the very value of a guarantee from FCI. This is more so when the Government has itself declared its intention to substantially pare FCI's procurement operations. Under these circumstances, FCI's guarantee has very little meaning, unless it is backed up by some kind of assurance from the Government on reasonable utilisation of the established capacities'', sources pointed out.

Under the original schedule, the interested parties were to have submitted their RFQ applications to RITES by February 18. Once the applications were evaluated, the announcement of the short-listed bidders was to take place by April 21. The successful applicants were to submit their detailed request for proposal (RFP) by August, which was to be followed by the technical and financial bids and finally, the issue of letter of intent and signing of the Concession Agreement with the selected investor.

"All these dates will now be pushed back by at least a month. We don't expect the RFPs to be submitted before September, which means the whole process will not be completed before early next year'', the sources added.

The Government has presently 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 tonnes (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 even 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 grain from the base to the field depots.

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