Need for fair fee structure
The government's agreement with India over transit fees and charges is far from comprehensive and the deal already signed is not helping Bangladesh much, a noted economist said yesterday.
There should have been a comprehensive transit connectivity agreement bringing all fees and charges under one umbrella and that is what was suggested by a government committee set up in 2009, added Mustafizur Rahman, executive director of the Centre for Policy Dialogue (CPD), a Dhaka-based think-tank, at a dialogue at The Daily Star Centre.
The Daily Star and the Institute for Policy, Advocacy and Governance jointly organised the dialogue styled “Bangladesh-India relations, progress made and the challenges ahead”.
Mustafizur made the comments after Mashiur Rahman, economic affairs adviser to the prime minister, said the government had followed the principles of the World Trade Organisation as much possible and taken marginal cost into consideration in fixing the transit and transportation charges.
“Occasionally you will hear that the charges are far less than what were recommended in the [government's] core committee report,” Mashiur said at the dialogue without elaboration.
However, after the programme he told a group of reporters that transit fees fixed by the government are considered lower than what were recommended by the core committee but the committee's report was not approved by any authority.
The committee in its report suggested that charges should be levied for pollution and river erosion, the economic adviser said, adding that in reality there was no measurement of pollution or river erosion.
Bangladeshi ships bringing Indian goods through the transit route are already paying tax and registrations fees to the government. The government cannot impose additional charges on them, he added.
In June, Bangladesh and India flagged off transit with the first Indian consignment reaching Ashuganj on its way to the northeastern Indian state of Tripura.
The fees charged for using the road network were fixed by the roads and highways ministry taking all matters into consideration, Mashiur said, adding that trucks using the route are also Bangladeshi.
Mustafizur disagreed with his comments on marginal cost.
“You can't have marginal cost as a component of charges when you don't have the infrastructure,” he said questioning the way transit charges had been fixed.
“We don't know how these fees have been set. Who are the people who have fixed them? I think there is a need for transparency.”
Of Tk 192 charged to carry a tonne of goods, customs get Tk 130, the roads and highways Tk 52 and the waterways department Tk 10.
To provide transit facility, Bangladesh will have to build infrastructure and so the cost of infrastructure and maintenance should be incorporated into the charges and surcharges, Mustafizur said.
Citing examples of the European Union whose transit and transportation protocols include surcharges and charges related to pollution, congestion and maintenance, the economist said, “What we have suggested is that take these factors into account.”
Moving goods through the Siliguri corridor, known as Chicken's Neck, crossing a distance of more than 1,600 kilometres costs India $30 per kilometer per tonne in case it uses the rail network and $150 per tonne for using roads.
But if goods are carried through Bangladesh to India's northeastern states, the distance goes down to only 400km with cost of $50 per tonne for roads and $10 for railways.
The Chicken's Neck is a narrow stretch of land in West Bengal, which connects India's northeastern states to the rest of India, with Nepal and Bangladesh lying on either sides of the corridor. Bhutan lies on the northern side of the corridor.
Both India and Bangladesh can share the benefit from the savings and invest in infrastructure development, Mustafizur said.
Under the current arrangement, small amounts of goods are being carried sporadically, he said.
“If we really mean business and want to implement the BBIN Motor Vehicle Agreement and India really gets connectivity, a large portion of the 11 million tonnes of goods that now go through the Chicken's Neck can go via Bangladesh.”
Infrastructure has to be ready to implement the BBIN (Bangladesh, Bhutan, Indian and Nepal) agreement. It is not only an issue for India; it is an issue for Bangladesh as well, as Bangladeshi trucks will carry and bring cargoes to and from Bhutan and Nepal through India, Mustafizur said.
“If we charge India, India will also charge us when we will bring goods from Nepal and Bhutan. So, one will have to look at what the reciprocity is and what are the areas where we can benefit in a win-win manner,” he said.
PM's adviser Mashiur, however, said the government had done quite well regarding transit and transportation as long as relations between the two countries were concerned.
If the cost of transportation across Bangladesh is higher than that of using the Siliguri corridor, India would prefer the latter, he said.
One of the major problems facing transit is that the responsibility has been divided between three to four departments.
“We don't have any effective mechanism of coordination,” he said.
India also doesn't have administrative arrangement for multimodal transport and so traders suffer whichever routes they use, he added.
“I guess there are a few areas where cooperation should improve.”