Steel silos are in huge demand as a highly mechanised and modern way of storing foodgrains. However, there has been very limited progress in the construction of steel silos. There is also a need for enhancing storage capacity in the country for petroleum products, petrochemicals and chemicals, to cater to prospects of the growing market for bulk liquids.
Silo storage
Steel silos ensure better preservation of foodgrains by providing optimum storage conditions and safety from loss due to theft. Storing grains in steel silos instead of warehouses requires a lot less space, which is crucial if land is scarce or expensive. As of February 2021, the Food Corporation of India (FCI) has taken 11 silos with a total capacity of 0.78 million metric tonnes (mmt) on a lease agreement basis to store foodgrains. State-wise, Punjab has the maximum number of silos with a net capacity of 0.43 mmt. Tamil Nadu has two silo storage structures in the districts of Chennai and Coimbatore, whereas Karnataka, Haryana, Maharashtra and West Bengal each have one silo storage facility.
In 2016, the Ministry of Consumer Affairs, Food and Public Distribution had approved an action plan for the construction of a 10 mmt capacity of steel silos across the country in public-private partnership mode. As of March 2021, only 0.83 mmt of such modern storage space has been created. Of the newly developed capacity, 0.45 mmt has been developed in Madhya Pradesh and 0.37 mmt has been developed in Punjab. The target was to complete the construction of the silos in three phases by financial year 2020; however, the plan was afflicted by delays from the outset, first at the approval stage by NITI Aayog and subsequently at the implementation level. The fact that storage loss has been steadily decreasing even with the traditional warehousing systems is one of the causes for delay. FCI’s storage losses dropped significantly, from 0.22 per cent during 2012-13 to 0.03 per cent during 2019-20. During 2020-21, as of February 2021, 1,806 tonnes of foodgrains have been damaged.
The government is planning to roll out new guidelines for the construction of silos by doing away with the mandatory requirement of having railway connectivity next to the storehouses. The new model will incorporate the “hub-and-spoke” system in which various silos will be connected by road to a mother silo, which will have rail connectivity. These steel silos will be fully automated, and help in prolonging the rake life of grains.
Liquid storage
The installed capacity of major crude oil firms provides an approximate picture of the actual storage capacity for crude oil in the country as it is difficult to assess it otherwise owing to the high degree of fragmentation. As of May, 2021, the total installed capacity of refineries across the country stood at 249.9 million metric tonnes per annum (mmtpa). There is a minimum storage facility of 249.9 mmtpa with companies such as Indian Oil Corporation Limited, Bharat Petroleum Corporation Limited and Hindustan Petroleum Corporation Limited. With regard to the storage of liquefied natural gas (LNG), there are six key promoters operating LNG terminals in the country. As of May 2021, these six promoters cumulatively provided a capacity of 42.5 mmtpa for LNG storage. These terminals are Petronet LNG Limited’s Dahej and Kochi terminals, Shell Energy India Private Limited’s Hazira terminal, Konkan LNG Limited’s Dabhol terminal, Indian Oil LNG Private Limited’s Ennore terminal, and the recently commissioned Mundra terminal, which is jointly owned by Gujarat State Petroleum Corporation LNG Limited and Adani Enterprises. As of March 2019, the major ports had a cumulative petroleum, oil and lubricants (POL) handling capacity of about 510 million tonnes (mt). The total handling capacity increased by about 60 per cent from 2015-16 to 2018-19. Among the major ports, Kandla had the maximum capacity at 152 mt during 2018-19, followed by Paradip port at 98.3 mt. Amid the Covid-19 second wave, sharp declines were recorded in the handling of POL compared to the pre-Covid levels.
Future outlook
The storage industry is still at a very nascent stage in India and has a high growth potential, given appropriate and adequate support from the government. The upcoming guidelines for silo construction are likely to encourage silo construction in India. The capacity of LNG terminals is expected to increase from 42.5 mmtpa at present to over 70 mmtpa during 2024-25, assuming that all the planned terminals come on stream. Going forward, mechanised storage infrastructure will provide a more optimistic outlook for the industry over conventional storage options.