Kathmandu, February 27

The government has urged the private sector to start necessary groundwork to utilise the Visakhapatnam Port of India for third-country trade. The Indian government agreed to allow Nepal-bound cargo to use the port as an additional gateway during Prime Minister KP Sharma Oli’s visit to India last week.

“The Letters of Exchange (LoEs) on ‘Operationalisation of Visakhapatnam Port’ and ‘Rail Transport To and From Visakhapatnam to Nepal’ have formalised the new transit corridor,” said Commerce Secretary Naindra Prasad Upadhyay, adding, “We will implement the same operational modality that we have been applying at Kolkata Port for the Visakhapatnam Port.”

Based on the provisions of Transit Treaty and Railway Service Agreement, Nepali traders can utilise the road corridor and rail facility, respectively, to ferry Nepal-bound cargo. “The government will facilitate the traders if they face any obstacles while utilising the facility,” said Upadhyay. He explained that there was no need for additional agreements with the southern neighbour to utilise the facility that has been extended to Nepal.

“The private sector should now approach the Visakhapatnam Port Trust for further details and we are ready to provide the required facilities for the private sector,” the commerce secretary stated.

The Visakhapatnam Port is 1,453 km far from the Inland Clearance Depot (ICD) Birgunj — the only rail-linked ICD of the country. However, traders can also ferry Nepal-bound cargo via road from the newly provided gateway or to the railway head at Jogbani (India) which is the border point with Biratnagar (Nepal).

Cost of third-country trade is expected to decrease by around 15 per cent if traders are able to bring in cargoes to Visakhapatnam, as per a study commissioned by Nepal Freight Forwarders’ Association (NEFFA) about five years back. Though transport cost from Visakhapatnam to Nepal can be relatively high as compared from Kolkata Port, which is just 737 km far from Birgunj, the ocean freight cost, cost of customs house agents and other logistic costs can be minimised by using Visakhapatnam, as per NEFFA’s study.

The government, on the other hand, is also preparing to request the government of India to set up a customs office at Singabad as India has agreed to provide rail transit facility through Singabad in India for Nepal’s trade with and through Bangladesh. The government wants to utilise this facility provided by India as soon as possible.

As the Nepal-India commerce secretary level talks is scheduled for April this year, Nepal will finalise all the necessary procedures to utilise the two transit corridors extended by India. Nepal will also request India to conclude the LoE of the bulk cargo movement from Kolkata to Nautanwa (railway head) and Kolkata to Jogbani. Nepal has sought the two additional routes for bulk cargo movement owing to the congestion at ICD Birgunj and transportation cost involved to ferry bulk cargo from Birgunj to Bhairahawa and Biratnagar.

However, the private sector has said that they will not be able to utilise Visakhapatnam Port until the government finalises certain pre-requisites like establishing a Consulate General Office in Visakhapatnam like the one in Kolkata.

“The current Railway Service Agreement (RSA) allows only Container Corporation (CONCOR), a subsidiary of the Indian Railways, to ferry Nepal-bound cargo,” said Rajan Sharma, president of NEFFA.

“Though there is a provision which states that both the governments can review the details of the RSA every six months, there is an issue regarding open wagon and refrigerated containers since long that we need to sort out,” added Sharma. “It will take at least three months for private sector to utilise Visakhapatnam Port for Nepal-bound cargo.”