Indian JV loses millions in Nepal dry dock pact

Indian JV loses millions in Nepal dry dock pact
IANS, 17-Oct-07

After entering into a pact to operate Nepal's biggest dry dock, Container Corp of India's (CCI) joint venture in the country has lost millions due to insecurity, political instability and the insurmountable red tape between Kathmandu and New Delhi.

Himalayan Terminals Pvt Ltd, CCI's joint venture in Nepal, has lost Nepali Rs.70-80 million in the three years since it won the contract to operate Nepal's biggest inland clearance depot in frontier town Birgunj.

'According to the contract, we were to pay the Nepal government Rs.956 million in 10 years,' Himalayan Terminals officials told IANS.

'The revenue was calculated on the estimated volume of traffic, which, according to data, should have been about 20,000 wagons. However, last year alone, there were only about 14,000 wagons.'

According to Himalayan Terminals, political turmoil in Nepal and frequent closures called in south Nepal by various groups badly affected flow of goods.

In addition, delay in customs clearance is also hurting business.

At present, the dry dock sees only the flow of closed containers from Kolkata in India. However, open wagons, such as coal rakes and those carrying steel goods, form a substantial part of container traffic elsewhere.

But since India does not allow open wagons into Nepal, business for the dry dock has been badly hit.

Although the Indian JV started working three years ago, India and Nepal have not yet been able to revise their Rail Services Agreement that would allow the entry of open wagons, despite the fall of King Gyanendra's regime and the coming to power of a 'friendly', multi-party government almost two years ago.

Plagued by the severe loss, Himalayan Terminals asked Nepal's commerce, industry and supplies ministry to revise the terms of the contract, pointing out that otherwise it might have to pull out of the agreement.

Though the Nepal Intermodal Transport Development Board agreed a month ago that the JV's complaint was just and reworked the terms of the contract, they have to be approved by the ministry as well as the cabinet.

The key commerce, industry and supplies ministry has been headless for nearly a month with the minister Rajendra Mahato having quit in a huff over a dispute in his Nepal Sadbhavana Party.

However, instead of appointing a new minister, Prime Minister Girija Prasad Koirala has allocated the portfolio to Home Minister Krishna Prasad Sitaula, who has been facing charges of incompetence from the parties and public for over a year now.

With all government offices closing for 10 days from Thursday on the occasion of Dashain, Nepal's biggest Hindu festival, it is unlikely that the troubled JV's problems will be addressed soon.