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Development and Operation of Dry Ports in

Sarad Bickram Rana, Executive Director, Nepal Intermodal Transport Development Board (NITDB) , Nepal 1 Presentation Overview

• Key Information on trade and transit situation • Policy Guidelines • Institutional Arrangements • Related Act and Regulations • Expected Benefit • Some Major Problems • Summary

2 NEPAL Area : 147,181 Sq. Km. Population: 26.5 Mill. GDP Per capita : 700 $

Kathmandu

3 Foreign Trade Situation Status of Nepal as per Doing 177th out of 189 Business Report Export Cost per container US$ 2,400 Export Time 42 days Import cost per container US$ 2,295 Import Time 39 days Stream Share of Total Trade(2012/13)

Export 11% Import 89% 100% 66% Overseas 34 % 100% 4 Transit Provision

Through Treaty of Transit between Nepal and India • Gateway Port (Out of major ports Port is a designated port ) • 26 Border Crossing point • 1 rail head

Through Rail-Service Agreement between Nepal and India • 1 rail based

Through Nepal-China Agreement

• 6 Border crossing point 5 Trade Corridors (Major)

Yari

Nechung

Rasuwa

Kimathanka Olangchungola

Dryports/ Inland Clearance Depots under operations Dryport under construction Proposed for future construction 6 Transport Infrastructure (2013)

Roads

Local Roads (50,943 Km) Strategic Roads (11,636 Km)

Railways

Jayanagar (India) - (Nepal) (India) – (Nepal) (51 KM) (5 KM) Airfields

48 Nos. (registered) Dryports Road based (3+1) Rail based(1)

7 Policies for Development of Dry ports

• Eighth Five Year Plan (1992-97) • Environment Policy • Investment Policy • Transit and Logistics Policy • Transport and Trade Facilitation Policy • Bilateral/Multilateral Trade and Transit Treaties • GATT/WTO, SAFTA, BIMSTEC • Nepal India Rail Services Agreement

8 Relevant Acts and Regulation:

• Private Financing Act 2006-BOT • Foreign Investment Policy and Technology • Land Acquisition Act-1977 • Environment Protection Act/Rules-1997 • Export and Import Act-1957 • Customs Act-2007 • Motor Vehicle Act-1993 • Labor Act-1992

9 Institutional Arrangements Nepal Intermodal Transport Development Board (NITDB) Secretary, MOCS Chairperson

Members Members (Public Entity) (Private Entity)

Deputy , NRB President, FNCCI

Director General, President, NCC Customs

Joint Secretary, MOPPT President, NEFFA

Executive Director (Secretary)

Perfect PPP Model 10 Functions of NITDB • To develop, manage and promote ICD terminals for the facilitation of Nepal's exports and imports; • To enter into agreement with private sector company, selected on the basis of competitive bidding, for leasing out the management of ICD terminals; • To prescribe criteria in determining the service charges of the terminal operation; • To conclude railway operation agreement with for rail movement of

cargo to/from ICD. 11 Key Government Agencies involved in Dryport developments

National Planning Commission Ministry of Ministry of Commerce & Urban Supplies Development

Relevant Ministry Agencies of Physical Developer/ Infrastruct for Operator ure and developme Transport nt of ICD

Ministry of NITDB / Finance NITDA Ministry of Environment

12 TMC Multimodal Customs Transport Operators

Agencies Customs related to Freight Agents Operation Forwarders of ICD

Shipping Lines Banks Quarantine

13  Three dryports at Nepal – India border were developed in 2000 with the WB assistance;  Birgunj – Rail linked with gateway port and other Indian rail head  and Bhairahawa – Road based  Forth dryport at Nepal – India border was developed in 2010 with ADB assistance  Kakarvitta – Road Based

 Fifth dryport at Nepal – China border is under construction with technical and Financial assistance from Government of PR China

14  Lease out to the private operator through international competitive biddings  Initial Lease Terms – Fixed Lease Rent for 10 years  Operator accumulated heavy financial loss  Revisited the contract after 2 years of operation  Minimum lease rent – Base case traffic  Revenue sharing (60:40) on every increment exceeding base case.  As a result operator recovered all the losses and became no. 1 tax payer of the district.

15 Dry Ports (Roadbased)

BIRATNAGAR BHAIRAHAWA

KAKARBHITTA TATOPANI

16 Dry Port (Railbased)

BIRGUNJ

17 Birgunj Dryport

Insert

Birgunj

18 Future Dryports

• ICD under construction at Tatopani on Asian Highway AH42 with grant assistance of PR China

• Pre-feasibility study of other potential dry ports – Rasuwa – 2nd Dryport at Nepal China Border – Dodhara - Chadani (Kanchanpur)-AH2

• CFS at Kathmandu Valley

19 20 UNESCAP

BhairahawaDRY Kakarbhitta Birgunj PORTS Biratnagar

Tatopani (Under Construction) 21 Functions of Dryports

• Receipt and dispatch/delivery of cargo • Stuffing and de-stuffing of containers • Transit operations by rail/road to and from serving ports • Customs clearance • Warehousing • Temporary storage of cargo and containers • Computerized processing of documents with capability of being linked to EDI

22 Expected Benefit

• One stop arrangements • Reduction in Transit time and cost • Managed Warehousing • Well- Equipped Facilities • Managed Parking Facilities • Security of goods • Export Promotion • Economic and Financial Benefit • Trade Facilitation 23 Som major Problems/Isseues At National Level • Lack of Appropriate Road Infrastructure • Lack of Appropriate quarantine Labs • Carteling/Syndicate of Transport etc. At Bilateral/Regional • Non tariff barrier • No harmonization of clearance system • Un-realistics provisions in the treaties At International Level • LOCODE and its registration in the Shipping Map • Standard guidelines for transshipment etc. 24 In summary……

• Absence of sea ports and a poor transport infrastructure make international trade more expensive and cumbersome • Cost of logistics and transit transportation for landlocked countries 15% higher than coastal countries • Dryports play significant role in reduction cost in the case of land locked countries • International agency should focus on bringing out guidelines related to transshipment, port leasing out, Registration of LOCODE, Locate dryport on the international shipping map, etc. 25 Thank You.

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