Forum (Spotlight Weekly)

“Operation of Birgunj ICD”
A Milestone to Multimodal Network

By Ananda B. Shrestha

Background: The long awaited prestigious multi million dry port project developed under the assistance of the World Bank is finally about to come into operation possibly from mid - July 2004 onwards. It is, indeed, a great breakthrough in transit transport stalemate. Actually, in order to make available the cost effective transit facilities, three ICDs (Inland Clearance Depot) were developed in Biratnagar, Bhairahawa and. Birgunj under the credit of US$ 28.5 million from the World Bank, The Birgunj dry port complex including pavement, warehouses, administrative office building, goods shed, electric lighting system, utilities and railway tracks were actually completed by December 2000. The complex spread across the stretch of 38 hectares of land has the broad gauge railway interchange with an extension of 5.4 km from Raxaul (India) to ICD Birgunj (Nepal) costing about Indian Rs. 20 million, which was funded entirely by India as a part of economic cooperation. However, it could not be operated earlier in the absence of a railway operational agreement between India and Nepal, and, consequently, it was lying idle for a long time.

Although, the preliminary agreement for operating the railway-based Birgunj ICD was already signed on November 07, 2003, the final endorsement by both the governments of India and Nepal to earlier agreement was recently concluded on May 21, 2004. The whole effort and attempt was to operate the infrastructure for greater efficiency and productivity saving about 35 - 40 % on the transit cost estimated to be in the range of Rs. 120 million annually. As the said facility could not be utilized for more than three and a half years, it seemed to have already created the negative impact on the overall trade and consequently sustained a cumulative loss of about Rs 4 billion.

Participation:

As most of the public sectors are unable to meet their prescribed targets on production, services and effective deliveries, the treasury ultimately has to shoulder the cost of under utilized capacity and inefficiency. As such, the best alternative available to the government to overcome the phenomenon of growing liabilities on subsidies at this stage is to look for suitable modality of transformation. In course of privatization process, the country had witnessed the transformation and liquidations of about 23 units of public sector during the last decade. There are still some important public sectors that have been already identified in the prioritized list, in the queue for the process of management transformation.

The liberalization policy motivating the participation of private sector to operate and manage the ICD, with an aim to reduce the transit transport cost by a substantial extent from the initial stage itself should be considered as an innovative approach to nurture, support and sustain the facilities. It is, indeed, a daring initiative on privatization and disinvestment modality. In view of supporting the mission of private participation, two road-based ICDs - Biratnagar and Bhairahawa have already been leased out to a private sector, which has been providing all the services in those ICDs for more than two years.

Responsibility:

The operation being a new approach on the multimodal chain system, the expertise required to use it efficiently is not available at present in the country. In view of overall management, experience, and the skilled human resources required for the operation of the facilities NITDB (Nepal Intermodal Transport Development Board) has recently selected CONCOR (Container Corporation of India), an experienced public sector from India as a TMC (Terminal Management Company). Being a sister concern of an Indian Railway, the CONCOR, the designated TMC, would be very much effective to run and maintain the schedule of Block train to and from Kolkata/Haldia. The monolithic rules and procedures of the railway has to be reviewed in consideration of motivating packages to attract truck users The transfer of know how and technology will facilitate the development of native man power eventually through the fulfilling of the conditional requirement of a Indo – Nepal joint venture. Similarly, the TMC should give priority to the native company/individuals as sub- contractors for discharging different ancillary services within ICD to the maximum extent for local support and economic improvement.

Mission:

Although different improved procedures and rules were adopted from time to time to facilitate simplified and smooth movement of traffic in transit to and from the port of Kolkata/Haldia (India) to Nepal, the systems introduced proved to be less effective and could not bring anticipated outcome. In this way, the imports and the exports to and from the kingdom seemed to be still costly and uncompetitive. Therefore, the streamlining of traffic in transit with an objective to minimize the extra burden of cost was a matter of great concern.

In addition to those infrastructures, the electronic data processing for customs duty assessment (ASYCUDA) along with its risk management selectivity module, amendments to the existing laws, rules and procedures including the enactment of multimodal transport act as complimentary components, on the one hand, and adopting commercial principle in a business like manner over and above the traditional public sector operation, on the other, would bring a revolutionary scenario in transit transport. The cost effective operation is expected from the private expertise and knowledge by ensuring effective services under simplified procedures. All these endeavors will be critical paths for upbringing the efficient networking and reducing the prominent factor of dwell time, in consequence.

What next?

As the facilities developed would result in a big evolution affecting transit transport system, it will also add a new dimension in the whole chain of transit transportation. The switch over from segmented to the multimodal system of transport certainly requires some time span to adjust and to update the existing modality into the modality at par with international norm and practice. Anticipating positive impact on economy as a whole, the new tariff structure would ultimately have to be implemented by digesting and diluting many hurdles and obstructions. The new infrastructure opening the innovative venue will provide the greatest challenge and opportunity to business community for the promotion of foreign trade by reforming the customs, transit and transport procedures. The value added service generated as a by-product of efficient cost effective operation will emerge supportive. Besides, the complimentary services would facilitate for competitiveness of Nepalese product in the context of the country being a member of WTO including the development of export processing zones near by the complex in future.

The improvement in the transit, transport and the customs procedures for the mountain kingdom are critical in order to simplify the whole gamut of trade facilitation as a transit and transport cost reducing exercise. Similarly, the railway operation agreement between Nepal and India has been just concluded for mutual benefit. Let us hope that the users would be able to share the benefits of the long awaited infrastructure even when it seemed to have taxed about Rs. 400 million by not using the facility for almost three and half years.

Both the stakeholders India and Nepal have to consider the operation of dry port as a challenging responsibility. The potential hurdles that might crop up during operation would be resolved in due course of time. The mechanism provided to review and analyze the operation after six months would justify and facilitate streamlining the whole traffic in transit including bilateral traffic. The operation, down the road, would also set right the long awaited solution to the highly congested phenomenon in Kolkata - Birgunj corridor by opening the venue for new opportunities and challenges with the introduction of simplified bill of lading for seamless transmission.

(Shrestha is a transport expert)