International Conference on SAARC @ 25 organized by IIC & RIS 16-17 September, 2010, New Delhi

1. International Conference on SAARC @ 25organized by IIC & RIS16-17 September, 2010, New Delhi Strengthening Physical Connectivity in South Asia Presented by Dr. M. Rahmatullah Former Director, Transport UN-ESCAP, Bangkok, Centre for Policy Dialogue, Dhaka

2. Presentation Outline • Introductory Remarks • Past Initiatives to address Connectivity - ESCAP initiatives - SAARC initiatives • Recent Initiatives - India-Bangladesh Joint Communique - Implications of Joint Communique • Who benefits from such cooperation? • India’s Financial Assistance to Bangladesh • Concluding Remarks

3. Introductory Remarks • Surface transport network in South Asia still continue to remain fragmented, despite existence of basic infrastructure & facilities • Due to lack of integration, logistic costs in South Asia are very high and range between 13-14% of the commodity value, compared to 8% in USA • Intra-regional trade in SAARC around 5%, compared to 26% in ASEAN, 58% in EU, and 62% in NAFTA. • At present, goods are transshipped at the border between trucks. No inter-country freight train except a passenger train between Dhaka-Kolkata. Rail wagons are pulled by Indian Locos upto the border and BR Locos pull these to their destinations.

4. Introductory Remarks • Before 1947 trade from NE-India used to pass through, territories of what is now Bangladesh • Rail and IWT transit across the then East Pakistan continued till 1965 & then suspended • Only IWT transit restored in 1972 after liberation of Bangladesh • Limited bus transport movement between India-Bangladesh, and India-Pakistan • NE-India, virtually a landlocked territory; and traffic from NE-India is required to travel 1400-1650 km to reach Kolkata Port. If transit was allowed, distances would be around 450-700 km. • Consequences of poor connectivity are huge. A 20’ container takes at least 30 days to move between New Delhi and Dhaka, and costs around US$2500, but by rail it could reach in 4-5 days, and cost around US$850 (Map).

5. Lack of Connectivities: The Consequences The Trans-Asian Railway in SA

6. Past Initiatives to Address Connectivity ESCAP Initiative • UN-ESCAP took pioneering efforts for AH (1959) and TAR (1960) • AH Agreement signed by 28 countries out of 32, and entered into force on 4 July 2005 • AH1 and AH2 are two major routes which connects SEA, SA with Europe (See Map) • TAR network has also been identified. Southern corridor from Indonesia via India to Turkey which is of our interest, covers a length of 35,200 km (See Map) • Five gauges involved, and several missing links, such as between Thailand-Myanmar, Myanmar-China, Myanmar-India, Pakistan-Iran • For operationalization of AH and TAR networks, separate agreements needed.

7. Kabul Islamabad New Delhi Kathmandu Chabahar Karachi Dhaka Tamu Mumbai Map 1: Asian Highway Route Map

8. Map : Trans-Asian Railway Mongla

9. Past Initiatives to Address Connectivity SAARC Initiative • Islamabad SAARC Summit (2004)’s decision to strength transport transit and communications, was followed by a SAARC Regional Multimodal Transport Study (SRMTS), completed June 2006. • SRMTS identified 10-road corridors, 5-Rail, 2-IWT corridors, 10-Maritime and 16 Aviation Gateways, for regional transport connectivity • 14th SAARC Summit in April 2007 in New Delhi adopted SRMTS recommendation and urged their Transport Ministers to oversee implementation and (a) extend SRMTS to include Afghanistan, and (b) to develop a model regional transit and transport agreement. • Sub-regional projects were proposed by Bhutan, India and Sri Lanka, and their implementation reviewed by Transport Ministers Meeting, Colombo, July 2009. A new activity “to run a demonstration container train from Pakistan to Bangladesh through India and Nepal” was also included.

10. Past Initiatives to Address Connectivity • Bhutan project focused on improvement of border crossing, immigration, parking, cargo handling at Phuentsholing. • India’s projects focused on (a) opening rail route: Birgunj-Katihar-Rohanpur-Mangla/ Chittagong with rail links to Biratnagar & Agartala (b) Agartala-Chittaong rail link (c) Improvement of Kathmandu-Birgunj-Kolkata/Haldia link and (d) Direct air connectivity: Male-New Delhi, Islamabad-New Delhi • Sri Lanka project focused on opening up (a) rail corridor Colombo-Chennai (b) Ferry service; Colombo-Cochin, and Colombo-Tuticorn • But marginal progress in implementation. A SAARC expert group is, however, pursing Motor Vehicle Agreement and a Railway Agreement.

11. Recent Initiatives to Address Connectivity India-Bangladesh Joint Communique- Agreement included: • Use of Mongla and Chittagong sea ports by India, Bhutan and Nepal. • Rohanpur-Kathihar-Rauxal-Birgunj BG rail link for transit traffic movement between Nepal and Mongla Port • Construction of Akhaura-Agartala rail link • Designating Ashuganj as a new port of call and transshipment port for onward connectivity to Tripura • Allowing bilateral container traffic between India and Bangladesh to be carried by both rail and IWT.

12. Implications of Joint Communique Allowing use of Mongla and Chittagong ports • Mongla port has 80% and Chittagong port has 40% spare capacity, at present level of management • Some investments already planned to further modernize ports and involvement of private sector at New Mooring under process. • Railway and IWT to be main mode to serve regional traffic. Major projects include: (a) Recommissioning Kulaura-Mahissasan (39 km), plus a transshipment facility (b) construction of Akhaura-Agartala rail link (11.3 km) (c) Double tracking of 3-major sections along Dhaka-Ctg. Route (d) Construction of 2nd Bhairab rail Bridge and 2nd Titas Bridge (e) Construction of an ICD at Dhirasram near Tongi (f) Strengthen several rail sections, modernization of signaling & acquisition of rolling stock (g) 2nd rail bridge on Jamuma

13. Implications of Joint Communique Role of Road Transport • Due structural weakness of BD roads, which have only 2-lanes,loaded Indian trucks can not be allowed to use these, until expressways are built on PPP basis using ROW of National Highways • Some road sections- Brahmanbaria-Mainamati, Sutarkandi-Sylhet and Benapole-Jessore-Khulna need upgradation • As part of immediate solution, Bangladesh Road Transporters could perhaps provide transshipment facilities, border to border across Bangladesh. • Alternatively, a Joint Venture Trucking Company (JVTC) could be set up by Bangladesh Road Transporters with shareholders in India, Nepal and Bhutan, with double registration for the company’s multi-axle vehicles.

14. Implications of Joint Communique Rohanpur-Kathihar-Birgunj rail link • Allowing above link to be used for bilateral trade between BD and Nepal, and third country trade of Nepal through Mongla port involving around 900 km travel. • Mongla port has already taken up several projects to enhance efficiency • A transshipment facility for container handling at Khulna, and arrangements for truck-trailers for onward movement to Mongla (44 km) being planned. • Strengthening of track and signaling in Rohanpur-Rajshahi section is also planned.

15. Implications of Joint Communique Akhura-Agartala rail link • Alignment around 11.3 km still to be finalized • This link will provide another connectivity between IR and BR on East side • This link will become a direct competitor to existing Mahishasan-Kulaura link after recommissioning (See Map) • A transshipment facility for container would be needed at Karimganj end, between BG and MG.

16. Chattak Sylhet Shahbazpur Kulaura To Dhaka Akhaura To Chittagong Map 8: Rail Link Between NE-India & Bangladesh

17. Implications of Joint Communique Ashuganj, a new transshipment port • This development will provide NE-India a shorter IWT-cum-road transport link to Kolkata • India will pay for development of facilities to carry ODC for power plant at Palatana, Tripura, with some costs to BD • BD is investing in developing transshipment facilities at Ashuganj to facilitate India’s container movement to Agartala by IWT-cum-road transport, for which BD could earn IWT charges, port charges and transit fee.

18. Implications of Joint Communique Container movement by Rail & IWT between India & Bangladesh • Jamuna bridge has no restriction for ISO containers movement • Containers can move upto Dhaka ICD through dual gauge • IWT container terminal under construction at Pangaon, and a few more private sector IWT container terminals under development • These IWT terminals will facilitate direct container movement between Kolkata and Dhaka as well as between Dhaka-Chittagong/Mongla • Self propelled barges to carry containers are already under construction in private sector in Bangladesh.

19. Who benefits from such cooperation • As a follow up to joint communique, some studies are ongoing to get a feel as to which country could benefit to what extent? • The study revealed that due to geographical proximity, and convenience of transport connectivity, certain states of NE-India are already well connected with Bangladesh by road and rail network (See Map) • Three nodal points selected for providing NE-India’s connectivity were (a) Guwahati (b) Silchar and (c) Agartala. • Finally, 14 routes were selected for further investigation, including linkage to Nepal & Bhutan. Breakdown was: Road corridors-8, Rail corridors-5, IWT corridor-1 (see Maps).

20. Map 1: Transport connections of Bangladesh to NE-Indian States 20

21. Map 2: Road Corridors to Serve NE-India’s Inter-State Traffic 21

22. Map 3: Road Corridors to Serve NE-India’s International Traffic 22

23. Map 4: Rail Corridors to Serve NE-India’s and Nepal’s Traffic 23

24. Map 5: Road Corridors to Serve Nepal and Bhutan Traffic 24

25. Map 6 : IWT Corridor to Serve NE-India’s Inter-state Traffic 25

26. Who benefits from such Cooperation? Corridor Analysis and costing • Cost per ton along a corridor was determined based on costing for all links and nodes. • One corridor through each of the nodal points was selected for presentation, covering 3-modes. Corridors serving Nepal and Bhutan are also being presented.

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33. Who benefits from such Cooperation?

34. Comparison of Transport Costs: Existing vis-à-vis Proposed Corridors 34

35. Who benefits from such Cooperation Assessment of traffic diversion Based on factors of geographical proximity, transport connectivity and convenience, it was assumed that 35% of traffic from Assam, 50% for Meghalaya could be potentially diverted through Bangladesh (see Map-1) On same logic, there is potential for complete diversion of traffic from Monipur, Mizoram, Nagaland and Tripura, through BD to Kolkata region. 50% Nepal traffic and 100% of Bhutan traffic could get diverted to Mongla Port due to cost savings, as shown earlier. Diversion of inter-state and international traffic is summarized in Table-2. 35

36. Map 1: Transport connections of Bangladesh to NE-Indian States 36

37. Total Potential Diversion of Freight Traffic of NEI, Nepal and Bhutan

38. India’s Financial Assistance to Bangladesh • India offered US$1.0 billion to BD for infrastructure development, @ 1.75% interest per annum. This is India’s largest loan ever given to any country. • 20 years repayment period, with a provision of 0.5% commitment fee per year, on unused credit after 12 months from date of contract approval. • 14 projects identified costing around US$601 million, of which 10 are of interest to BD, and 4 of India-BD interest. • 10 projects of BD’s interest will also benefit India when transit traffic movement starts. The 4 projects of BD-India interest should ensure that both sides benefit almost equally.

39. India’s Financial Assistance to Bangladesh Details of the Projects being financed • 6 Nos high powered dredgers and transshipment port at Ashuganj and reconstruction of road to Akhaura/Agartala. • Procurement of Locomotives, passenger coaches, tank wagons, flat wagons, break vans, etc. • 2nd Railway Bhairab Bridge and 2nd Titas Bridge. • Purchase of 300 double decker and and 50 articulated buses • Construction of Rail over passes at Jurain and Malibagh • Ramgarh-Sabroom Road • Power Grid line between India-Bangladesh, around Bheramara • 4-subprojects related to capacity building of BSTI/ Laboratory.

40. Concluding Remarks • Transit traffic from NE-India, Nepal and Bhutan would find it attractive to transit through BD, and use its ports, as the savings could range between 12% to 80% depending on the route being used. • Potential transit and international traffic could be around to 18.00 million tons of which inter-state would be around 16.00 million tons and international (including Nepal & Bhutan), around 2.00 million tons. • Railway and IWT shall have to carry most of the transit traffic. Initially BD transport system can perhaps carry around 10% of potential traffic. • Bangladesh will need around 3-5 years to put its transport system in full gear to carry entire transit traffic, say from 6th year

41. Concluding Remarks • BD shall have to invest around US$ 4.0 to 7.0 billion to improve its national transport system for its continued economic growth. In the process, it will create enough spare capacity to carry transit traffic, except a few specific projects that would be needed for only transit traffic. • For carrying high value commodities, instead of providing transshipment service from border to border, which may not be cost-effective. BD road transporters could float a joint venture trucking company (JVTC) • By providing transit facilities to neighbouring countries, BD has opened up opportunities for regional patronage of its Deep Sea Port (DSP), BD will open offered India to invest and use DSP. • Finally, the recent India-Bangladesh initiative could perhaps provide a positive signal to other SAARC countries and encourage them to strengthen their cooperation with neighbouring countries, keeping also in mind the Chinese experience, where it has maintained extensive economic cooperation with Taiwan, although they are far apart politically.

42. Thank You for Your Kind Attention

43. SAARC REGIONAL ROAD CORRIDORSCorridor SH1: Lahore-New Delhi-Kolkata-Benapole-Dhaka-Akhaura/Agartala 43 43

44. Map : Direct links through Bangladesh to NE-India 44

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