NEPAL MULTIMODAL TRANSIT AND TRADE FACILITATION PROJECT CASE STUDY

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NEPAL MULTIMODAL TRANSIT AND TRADE FACILITATION
PROJECTCASE STUDY

•  FABIO GALLI
• SASEI
• TRANSPORT FORUM 2005

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PROJECT GENESIS

• Nepals remote and landlocked geographical
  location, sandwiched between China and India, has
  been a major cause limiting its economic
  development.
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PROJECT GENESIS

• Poor transport infrastructure cumbersome
  customs procedures have caused
  
• Very high transport costs
• Substantial pilferage loss
• Unreliable and slow movement of import/export
  goods
  
• Trade diversion and smuggling

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PROJECT GENESIS

• To improve trade competitiveness, Nepal
• negotiated an improved India-Nepal Trade
  Transit Treaty, and
  
• planned a set of integrated transport
  infrastructure improvements (road, customs and
  dry port facilities) on its side of the
  Nepal-India transit corridor.

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PROJECT OBJECTIVES

• Project Development Objectives (PDO)
• Reduce import and export transport costs
• Streamline transit and trade procedures

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PROJECT COMPONENTS

• Construction of new road/rail Inland Container
  Depot (ICD) near Birgunj
  
• Reconstruction of existing road only ICD at
  Biratnagar and Bhairahawa
  
• Construction of railway spur from Raxaul (India)
  to Birgunj (Nepal)

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PROJECT COMPONENTS

• TA for trade facilitation
• Installation of Automated Systems for Customs
  Data (ASYCUDA) at Birgunj, Biratnagar
  Bhairahawa
  
• Installation of Advanced Cargo Information System
  (ACIS) at Birgunj, Biratnagar Bhairahawa

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PROJECT COST DURATION

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• Total project cost estimated at US28.5 million
  (actual cost US21.4 million)
  
• Implementation period was supposed to be about 4
  (four) years starting from early 1998 to end-2001
  (actual time 5.5 years)

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EXPECTED PROJECT BENEFITS

• Lower transport costs on the 1000 km transport
  corridors between Nepal and Kolkatta
  
• More efficient customs procedures
• Connection to Indian Railways rail network
• Less pilferage damage to cargo
• More reliable secure carriage of goods
• Private sector development through leasing out of
  three facilities
  
• Safer more environmentally sustainable carriage
  of goods

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WHAT WAS ACHIEVED AT PROJECT CLOSURE

• Reconstruction/construction of the ICDs
  ancillary infrastructure to a reasonable
  standard, on time below budget
  
• Introduction of Single Administrative Document
  (SAD) ASYCUDA
  
• Rolling out of a scaled down version of ACIS
• Leasing out of the improved ICDs at Bhairahawa
  Biratnagar to the private sector
  
• Streamlining of some of the transit procedures
  (i.e., intro of one time lock for containers)

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WHAT WAS NOT ACHIEVED AT PROJECT CLOSURE

• Leasing out of the ICD at Birgunj to the private
  sector was not completed
  
• The Railway, Carriage of Goods by Road,
  Multimodal Transport and Marine Insurance Acts
  were not enacted

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WHY WERE THE PROJECT PDOs NOT FULLY ACHIEVED

• It took over 3 years to negotiate a Nepal-India
  Rail Service Agreement to enable train services
  to operate into the ICD at Birgunj
  
• Without a negotiated Nepal-India Rail Service
  Agreement, leasing out of the ICD at Birgunj
  could not be completed by end of project
  
• Delays in finalizing the Nepal-India Rail Service
  Agreement resulted in a 3.5 years gap between the
  completion of the ICD at Birgunj and its actual
  operation

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LESSONS LEARNED

• Regional transit corridor projects require solid
  upfront and continued commitment by
  countries/parties involved
  
• There needs to be a high degree of symmetry in
  the perceived benefits by all countries/parties
  involved in a regional transit corridor project
  
• Better sequencing of physical (civil works) with
  non-civil works components is essential to avoid
  initial underutilization of assets