Birgunj ICD operation lingers

Post Report

BIRGUNJ, Dec 16 – The reluctance of the Indian authorities to sign the protracted agreement on Railways Operation Modality is likely to further delay the operation of the Birgunj Inland Container Depot (ICD).

The test-run by an Indian railway engine to the ICD early March this year had raised hopes that the dry port would be operational soon. The engine had test-ran the six tracks laid down at the ICD and returned back to India.

And almost nine months have passed since the tracks were tested, yet the execution of the ICD seems nowhere in sight.

And it is not just the government that is frustrated with the delay. Even businessmen are crying foul over the indifference of the Indian authorities.

"There is an utmost need for operationalising the ICD soon, especially in the light of the high costs that Nepal, a landlocked country, has to bear in the transportation of goods," says Satya Narayan Agrawal, president of the Birgunj Chamber of Commerce and Industry.

The obstacle in implementing the project comes despite the assurances of an Indian secretarial level delegation to Kathmandu in early August who assured the Nepali side to sign the protracted agreement within the next three months. The delegation was in the capital to review the Nepal-India trade relations.

And the delay is as a result of the indifference of the Indian Railways Board, who despite Nepal’s repeated official follow-ups, has failed to respond on the Railway Operation Modality draft sent by Nepal more than a year and half ago.

And it is not just the Nepali business community and the government that is irritated by the dilly-dallying in the operation of the ICD. Even the World Bank, which financed the construction of Birgunj ICD that cost Rs 730 million out of the estimated 770 million had shown concern on the issue of railway agreement with the Indian Embassy.

Once Birgunj ICD, with a capacity to handle 40 thousand containers annually, comes into full operation, transit and transportation costs for Nepal is expected to go down by as high as 40 per cent. Presently, almost 130 truck containers ferry goods to and fro from Calcutta and Birgunj each day. And each truck charge as high as Rs 25,000 per trip.

The World Bank had decided to finance the project in December 1997, only after India agreed to co-operate it and even extended grant assistance for the construction of board-gauge railways track connecting the ICD to Raxaul, India. India constructed the 5.4-kilometre long broad-gauge railways track that cost Rs 200-million from Birgunj to Raxaul, connecting Birgunj with Calcutta and Haldia of India.

The ICD was earlier expected to be completed in March 2000, but the goal remained unrealised largely due to the delay in construction works and construction of broad-gauge railway lines by India. The overall construction work was completed in January 2001.

Out of the estimated cost of US $ 28.5 million, US $ 23.5 million was financed by IDA, the World Bank and US $ 5 million was met by the government. Birgunj ICD is the largest among all ICDs that the government undertook. The other two ICDs are located in Biratnagar and Bhairahawa, both of them have already come under full-fledged operation.

Ambassador Sikder meets Shrestha

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KATHMANDU, Dec 16- Cyril Sikder, the Ambassador of Bangladesh for Nepal met Ravi Bhakta Shrestha, president of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) here today.

According to a press release issued by the Federation, Shrestha expressed his sincere thanks to Bangladeshi Envoy, for his tremendous support in strengthening the bilateral relationship between the two countries. During the visit, Shrestha hoped for the continuity of the envoy’s support to enhance the economic relationship between the two countries.

Shrestha pointing out the opening of Kakarvitta-Fulbari Banglabandh Marga, stated that there are still difficulties in the route due to lacking infrastructure development.

He also requested the Bangladeshi Envoy to convey the ongoing progress in several areas including information technology, medicine, chemical fertilizers and others. He also expressed that Nepali investors are awaiting to share the experience of the Bangladeshi businessmen.

Ambassador Sikder, appreciating the support of the Federation to establish close relationship between Nepali and Bangladeshi entrepreneurs stated, "The experience of the Bangladesh over the Export Promotion Zone (EPZ) can be shared with Nepal."

"Nepal’s hydropower and Bangladesh’s gas products must be used in gaining mutual benefit," he said. Nepal should take the initiation to export agricultural products to Bangladesh as the Bangladeshi government has agreed to import it with nominal duty fee," added he.

Economy, finance and market

By Supa Upadhyay

Domestic money market:

The Average Weighted Discount Rate (AWDR) of 91-day Treasury Bills (TBs) unchanged at 4.95 compared to previous week but the AWDR of 364-day TBs dipped by 13 basis points to 5.51 percent. The rupee was traded higher at NPR 98.78 and lower at NPR 98.77 for 91-day TBs and higher at 94.79 and lower at 94.77 for 364-day TBs. The NRB had received 23 bids worth NPR 1193.03 million against the notified amunt NPR 672.2 million for 91-day TBs and 28 bids worth NPR 1050 milion against the notified amount NPR 308.002 million for 364-day TBs. The Repo rates for member banks and institutions have been quoted at 5.9469 for the trading days 11 to 17 December 2001 for 91-day TBs. The outright purchase facility for bank, institutions and other on TBs is also available. In the regular weekly auction, the NRB is going to issue 91-day TBs worth NPR 750 and 364-day TBs worth NPR 110 million on December 18, 2001.

Domestic capital market:

The stock market witnessed a weaker week, as the Standard Chartered Bank could not confirm issuing bonus shares out of its handsome profit in the Fiscal Year 2000/2001 as expected by gerneral shareholders. As a result, the price of this bank sank by NPR 175 over the week. The NEPSE Index-100 opened firmly at 290.49 moved lower in all consecutive days and finally closed lower to 284.48, netting a loss of 6.09 points over the week. This week, trading was estimated at 35176 shares valued NPR 17.5 million compared to 42940 shares valued NPR 14.3 million of previous week. Commercial Bank and Finance companies shared 80.0 percent and 17.0 percent of total traded amount respectively. This week, Hotel Sector, Commercial banks and Other Sector lost. Business Sector, Production Sector and Finance/Insurance remained unchanged. Out of thirty-six traded companies, nine companies improved, seventeen companies lost and ten traded companies remain unchanged at their previous prices. Alpic Everest Finance, Bank of Kathmandu and Oriental Hotel registered the first, the second and the third most traded companies trading 5810, 4186 and 4000 shares respectively. Shares of Nabil Bank, Nepal Indosuez Bank, Standard Chartered Bank, Himalayan Bank, Nepal B’desh Bank, Bank of Kathmandu, NIC Bank, Oriental Hotel, Sagarmatha Insurance, Universal Finance, Nepal Merchant Bank & Finance and Alpic Everest Finance were able to trade in all five working days. Likewise, Nepal Bank Ltd, Everest Bank, Taragaon Regency Hotel, Nepal B’desh Finance and Lumbini Finance were able to trade in four working days.

Forex round-up:

The sterling strengthened sharply against the dollar as sentiment on the greenback took a hit after weak U.S. retail sales number and a large fall in U.S. stocks. Recent data confirm the relative strength of the UK economy compared with the U.S. and Japan, which continue to support sterling, a treasury economist said. At the same time, the Euro also significantly against the dollar following the release of minutes from the Federal Reserve’s rate-setting meeting.

The yen weakened to three-year lows against the dollar on Friday as the market braced for upcoming BOJ meeting which may take policy for a further weaker yen. Against a background of weakening economic fundamentals, speculation is growing that BOJ may adopt a new policy of foreign bond buying to drive the yen to still lower levels. The INR and the NPR both remains unchanged against the dollar over the week.