Forum (Spotlight Weekly)

Our Birgunj Dry Port – Hostaged and Ransomed?

By SB Pun

If one were to peruse through the World Bank’s dossier of March, 1997 on the Borrower Implementation Plan for the Nepal Multimodal Transit & Trade Facilitation Project (more popularly known as the Inland Container Depot Project, ICD Project), there are several interesting features worth noting. The Bank commented that Nepal is a landlocked country and the poor transport infrastructure has burdened the Nepalese economy with very high transport costs. “Over 90% of Nepal’s foreign trade (in value terms) is transported by road and rail, with transit through India.” The Bank vouchsafed that the ICD Project will bring forth a “significant reduction in transport costs” and our jubilant “transport Pundits” claimed a saving of thirty to forty percent. One may have also read Chinpal Rauniyar’s continuous flood of hymns in praise of the Bank’s ICD project in the Kathmandu Post daily. It is clear that both HMGN and the Bank were counting the chickens before they were hatched. Three years after Project completion, millions of tons of goods have traveled up the Haldia/Raxual/Birgunj corridor of this poverty-ridden and insurgency-affected country. Many “friendly” countries and multilateral donors sympathize with our sad plight. But so far not a single Kilogram of goods has passed through the Birgunj Dry Port, completed at a cost of US$ 28.5 Million!

Reverting back to the Bank’s Implementation Plan, the major component of the Project, US$ 17.5 million, was for the construction of the rail and road inland freight terminals at the sprawling 38 hectares of acquired land at Sirsiya, Birgunj. The inland freight terminals at Biratnagar and Bhairawa notched up another US$ 3.4 million. Another US$ 3.0 million was spent on introduction and extension of the modern international/UNCTAD “best practices” (the automated system of customs data, ASYCUDA and the advance cargo information system, ACIS) and the trade facilitation involving: documents and procedures simplification, modernizing customs administration policies and operational procedures as well as carriers’ liability and insurance provisions, and strengthening the standards and capacity of freight forwarding and customs clearing agency.

As usual, the Bank did make the Project Risk assessment wherein “Delays in construction of Raxual (India)- Sirsiya (Birgunj) rail spur; Inadequate Indian Railways (IR) train services to Sirsiya (Birguj) IFT” did figure in the third and fourth risk category. The Bank categorically mentioned, “The risk that the construction of the rail spur will be delayed is real. However, … the high priority that Government of India (GOI) has placed it in the bilateral assistance program should ensure its timely completion.” On the inadequate Indian Railways’ train services, the Bank further states, “The risks are that IR may not offer frequent, reliable services and that it may capture most of the transportation cost saving in higher rail rates.” It appears that our transport Mandarins then dreamt that the “thirty to forty percent transport cost reductions” was already safe and sound in their pockets. Despite that “prophetic writing” in the Bank’s dossier, it never occurred to our Mandarins that the Government of India would be fighting tooth and nail over this tiny innocuous transportation cost savings. The continuing three-year “friendly bilateral transit discussions” all boil down to the long term competitiveness of our Nepalese products in the huge Indian markets under the tutelage and umbrella of the WTO. This we must always take due cognizance of. The meticulous Bank, besides formulating the Borrower Implementation Plan, also saw to it that HMGN formulated the Trade Facilitation Action Plan and Agenda, Resettlement Policy Framework with Acquisition, Compensation and Rehabilitation Plan and the Performance Monitoring Indicators.

On the Indo/Nepal moves to operationalize the Birgunj Dry Port, the two Prime Ministers of India and Nepal in March, 2002 (during Sher Bahadur Deuba’s visit to India) “directed” that the two sides negotiate and conclude the bilateral agreement to operationalize the Raxual/Birgunj rail link and the Inland Container Depot at Birgunj within two months. This “direction” to conclude the agreement within two months also applied to a new additional agenda: the Trans-Border Movement of Motor Vehicles. The 5.4 Km broad-gauged Raxual/Birgunj rail link, despite the Bank’s apprehension, was finished on time amply demonstrating “where there is a will, there would be a way”. But eleven months after the Prime Ministerial directions, the February, 2003 statement of the Embassy of India noted, “The Railway Agreement has not yet been finalized due to certain legal issues being raised, which require consultations with legal experts on both sides. …. It may be mentioned here that India has built a rail link between Raxaul and Birgunj under a grant precisely to facilitate the ICD operation. … As regards to the bilateral Passenger Traffic Agreement, the Embassy of India wishes to clarify that conceding Nepal’s position, the Indian side agreed not to include the movement of cargo vehicles in the new agreement. … There are some technical issues which remain to be resolved and efforts are already underway to reach a satisfactory conclusion.”

A further eight months have elapsed since that Embassy of India statement. In the meantime, three noteworthy developments have been reported by the news media. One was the comment by the ambassador of India at Birgunj that the Indian Consulate Office would be opening there very shortly to facilitate trade between the two countries. This is probably a diplomatic jargon that if Nepal wants the Birgunj “Dry Port” fast then it better act in the same fashion on the Birgunj Consular Office as well. The second media report was that of the World Bank “threatening” to close the ICD Project as a “failed project”. One needs to weigh in how much “due diligence” the Bank has applied to this project, landlocked Nepal’s vital link to the outside world. Despite the behemoth breathing down its neck, did the Bank fulfill its “honest broker’s” role in this ICD saga? Or did the Bank merely fill in the Nero role: content that the loan has been disbursed, content that the contractors have finished their jobs and content that the interest with the principal will accrue to the Bank once the project is officially closed. The final and most recent media report is that of the governments of Nepal and India about to finally clinch the deal on the operationalization of the Birgunj Dry Port. The diplomatic jargon that was referred to above seems to have really electrified this process!

To conclude, while the Bank reportedly closed the Project in September, 2003 and while the three reach stackers worth US$ 1.2 million rusted unused at Birgunj for three long years, HMGN, GOI and in particular the World Bank need to transparently explain to our poverty-ridden and blood-stained Nepalese that the 28.5 million dollar mariner’s albatross, the Birgunj Dry Port, was not hostaged for the last three years! Now that the deal is finally in the offing, the World Bank, with a sigh of relief, may need to calculate the ransom that the stricken Nepal was made to pay. A ransom that would not have materialized, if the Bank had seriously used its professed “honest brokering”!