Plans afoot to sign bulk cargo movement LoEs
Kathmandu, August 22
Nepal has proposed the government of India to sign the letters of exchange (LoEs) on movement of bulk cargo to nearest railhead of major checkposts of Nepal-India border, namely Jogbani (Biratnagar), Nautanwa (Bhairahawa) and Rupedhia (Nepalgunj) from the gateway ports - Kolkata/Haldia and Visakhapatnam - during the upcoming visit of Indian Prime Minister Narendra Modi to Nepal.
Indian PM Modi is expected to attend the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) Summit, scheduled to be held here on August 30 and 31.
Earlier, Nepal had proposed that the LoEs be signed during the visit of the Indian prime minister in May. However, the plan could not be materialised due to lack of sufficient preparation, informed Ravi Shanker Sainju, joint secretary at the Ministry of Industry, Commerce and Supplies.
“However, Indian officials agreed to sign LoEs as soon as possible during the joint secretary-level talks held recently in New Delhi for the comprehensive review of Nepal-India Trade Treaty,” according to Sainju.
Currently, bulk cargo is ferried via rail only to Raxaul and Birgunj. The cost of transportation is expected to drop substantially to ferry bulk cargo to western and eastern parts of Nepal if the LoEs are signed in the presence of Indian prime minister on the sidelines of BIMSTEC summit.
Due to its efficiency and high water draft level, Visakhapatnam port is considered the best alternative to import bulk cargo. However, the transit treaty allows movement of containerised goods only to Birgunj and Biratnagar from Visakhapatnam port or the movement of bulk cargo is not allowed from Visakhapatnam.
Traders have said that if bulk cargo movement is allowed from Visakhapatnam port, it could be better utilised for import of bulk cargo like cement, fertilisers, HR coil, clinker and coal. Likewise, the transit treaty limits the bulk cargo movement facility only to Birgunj (Raxaul) from Kolkata/Haldia port.
The government of India has already given permission for the movement of containerised cargo to the nearest railhead (in Bathnaha) from Biratnagar - another major customs points of Nepal from both Kolkata/Haldia port and Visakhapatnam port, apart from Birgunj dry port - the only rail-based dry port of the country.
The LoE for movement of bulk cargo has been proposed by Nepal since long. The draft titled ‘Process Simplification and Additional Route' was submitted for comments to the Ministry of Commerce and Industry, India some two years back.
Until recently, India had expressed reluctance to provide such facility citing the chances of trade deviation. However, now the Indian government is ready to provide this facility as the Electronic Cargo Tracking System has already come into force.
“The facility of bulk cargo movement to the nearest railhead from the Nepal's major customs point is critical to reduce the cost of transport logistics for the competitive industrial environment,” said Sainju.
Currently, Kolkata/Haldia is the only port from where Nepal is allowed to import bulk cargo, but sometimes it takes over a month to just get space to dock the cargo ship, as the water draft level is not sufficient, according to traders. Traders have said that the volume of bulk cargo will also go up if the facility is granted from Visakhapatnam port.