The project

Vision

The Government of Punjab, through its state level agency for food-grain procurement, envisions increasing and improving wheat storage and distribution infrastructure in the State through private-sector participation.

Need

Punjab is the "breadbasket" of India with agriculture contributing almost 40% to the state gross domestic product in contrast to the national average of 26%. Wheat is procured from the farmers at more than 1500 “Mandis” (local procurement units). Currently, the Government has a stock of over 8-9 million ton of wheat, some of which is stacked in the open due to scarcity of warehouse space. The Government has reportedly procured another 11 million tons in the crop season ending April 2009. Overall, Punjab is likely to face a storage shortage of around 7.1 million tons.

High storage-losses and procurement bottlenecks due to lack of sufficient storage space has prompted the Government to explore private-sector participation in developing scientific wheat storage and management facilities or “silos”. The Government is planning to develop a 50,000 tonnes silo facility as a pilot project on BOO basis.

IFC has been retained by the Government for designing and implementing the transaction for private sector participation in this project. IFC, as the Lead Transaction adviser, has played a crucial role in developing a transaction structure that wil ensure sustainability of this project and similar future PPP projects.

Scope

The project is structured as a Public Private Partnership (PPP), whereby the private sector would be responsible for:

The Government would be responsible for:

Consultants

IFC has worked in co-ordination with the Government of Punjab, PUNGRAIN, and with the support of the following specialized consultants: