Connectivity issue: Political leaders set the tone

Dr. M. Rahmatullah

Photo: Yagi Studio/GettyImages

Surface transport network in South Asia still continue to remain fragmented, despite existence of basic infrastructure and 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 is around 5%, compared to 26% in ASEAN, 58% in EU, and 62% in NAFTA. If overland transport connectivity among the SAARC countries could be improved, this could have facilitated enhanced intra-regional trade.

At present, goods are transshipped at the border between trucks. No inter-country freight train moves across the border except a passenger train which runs between Dhaka and Kolkata. In case of freight trains, rail wagons are pulled by Indian locomotives upto the border and BR locomotives pull these to their destinations, within Bangladesh.

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, and then suspended. After liberation of Bangladesh, transit only by IWT was restored, but restriction on movement of transit traffic by road and rail continued. At present, only limited bus transport movement between India-Bangladesh, and India-Pakistan are taking place.

NE-India is 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 across Bangladesh would be around 450-700 km. It is due to lack of transport cooperation between India and Bangladesh that traffic between NE-India and the mainland India is not allowed to transit through Bangladesh.

Consequences of poor connectivity are huge. A 20 ft. container takes at least 30 days to move between New Delhi and Dhaka, and costs around US$2,500, but by rail it could have reach Dhaka in 4-5 days, and would have costed around US$850. It is, therefore, crucial that transport connectivity is established sub-regionally to bring a win-win situation for all countries involved in the Northeastern sub-region of South Asia

One of the earliest initiatives to establish regional connectivity was taken by UN-ESCAP in 1959 and 1960, through two of its regional projects namely, the Asian Highway (AH) and the Trans Asian Railway (TAR) respectively. As part of the SAARC Regional Multimodal Transport Study, completed in 2006, a number of additional regional routes were also identified. But due to lack of political commitments, these networks have not been opened to regional traffic as yet.

A real breakthrough came only recently, when a Joint Communique was signed by India and Bangladesh on January 12, 2010 following a historic India-Bangladesh Summit held in New Delhi. The Joint Communique has set the tone to achieve a long lasting cooperation in transport connectivity in the northeastern sub-region of South Asia. Once the various provisions of the Joint Communique are implemented, it could facilitate, a seamless movement of traffic across the region.

Past initiatives to address
connectivity
The UN-ESCAP Initiative
As indicated earlier, UN-ESCAP took one of the pioneering efforts to establish regional connectivity through two of its famous projects, namely the Asian Highway (AH) and the Trans Asian Railway (TAR) since 1959 and 1960 respectively. The AH Agreement has already been signed by 28 countries out of 32, and entered into force on 4 July 2005. AH1 and AH2 are the two major routes which connect Southeast Asia and South Asia with Europe. (See Map-1).

The TAR network has also been identified. Southern corridor from Indonesia via India to Turkey which is of direct interest to South Asia, covers a length of 35,200 km. Five gauges are involved, and there are still several missing links, such as between Thailand-Myanmar, Myanmar-Yunan Province of China, Myanmar-India, Pakistan-Iran. (See Map-2).

In order to operationalize the Asian Highway and the Trans Asian Railway networks, separate agreements are required to be signed by the countries concerned, spelling out the details of the routes to be used, the types and size of vehicles which would be allowed to pass, etc.

The SAARC Initiative
The SAARC Summit held in Islamabad in 2004, decided to strength transport, transit and communications links among South Asian countries. This was followed by a SAARC Regional Multimodal Transport Study (SRMTS) which was completed in 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 held in April 2007 in New Delhi approved SRMTS recommendations and urged their Transport Ministers to oversee their implementation. This Summit also decided to: (a) extend SRMTS to include Afghanistan, and (b) to develop a model regional transit and transport agreement.

At the 14th Summit, some sub-regional projects were proposed by Bhutan, India and Sri Lanka, and their implementation was reviewed by Transport Ministers Meeting, held in Colombo in July 2009, but progress so far has been marginal except in respect of transport agreement. A SAARC expert group is, currently, going through the drafts of Motor Vehicle Agreement and a Railway Agreement, for finalization by the member countries, to facilitate seamless movement across the border. However, a new activity “to run a demonstration container train from Pakistan to Bangladesh through India and Nepal” was added by the SAARC Transport Ministers.

Recent Initiatives: India-Bangladesh Joint Communique
Bangladesh and India signed a Joint Communique on 12th January, 2010 following a India-Bangladesh Summit. In respect of transport connectivity, the Joint Communique included the following:

Use of Mongla and Chittagong Sea Ports by Nepal, Bhutan, and India;

Availability of Rohanpur/Singabad-Kathihar-Rauxal-Brigunj broad gauge rail link for movement of Nepalese third country trade through Mongla Sea Port, as well as for bilateral trade between Bangladesh and Nepal;

Construction of Akhaura-Agartala rail link;
Designating Ashuganj as a new port of call and transshipment port for Indian transit traffic by IWT and then for onward movement to Tripura by road transport; and

Allowing bilateral trade between India and Bangladesh to be carried in containers through rail and water transport routes.

The Joint Communiqué, if implemented fully, will open up connectivity to the neighboring countries of India, Bhutan and Nepal as well. In the process, India will gain considerably in terms of savings in transport cost per ton of cargo, and huge time savings, as well. As part of this process, Bangladesh could trade in transport services and earn (in foreign exchange) transport charges in the form of rail charges, port charges, road transport charges and water transport charges, depending on the routes being used. In addition, Bangladesh should be able to earn transit fees as well (a part of the savings that Indian transit traffic would be gaining per ton).

Offering such transport connectivity would also provide an opportunity to Bangladesh to establish itself as the “transport hub” of the subregion comprising Bangladesh, Bhutan, India and Nepal.

Opening up of the regional connectivity and port facilities to neighboring countries are also expected to increase the patronage for Bangladesh's Deep Sea Port project at Sonadia (south of Chittagong). Bangladesh has already invited both India and Yunnan Province of China to use the Deep Sea Port and join hands in its development. Meanwhile, Myanmar has also indicated its willingness to allow a road link to be established between Kunming and Chittagong, through its territory.

Implications of Joint Communique, in respect of connectivity

Based on an assessment of the Bangladesh transport system and its operational capability, the Bangladesh authority came to the conclusion that regional traffic shall have to be carried mostly by rail and inland water transport (IWT). Since Bangladesh road network has structural weakness (as these were designed for 8.2 ton axle load and the roads are only 2-lanes), these can be used in a limited way to carry only high value commodities. In order to facilitate movement of regional traffic across Bangladesh and for their access to the sea ports, a thorough assessment was made of the various initiatives and investments needed to implement each of the decisions included in the Joint Communique.

The details are as follows:

Allowing use of Mongla and Chittagong ports
According to the assessments made by the respective port authorities, Mongla port has 80% and Chittagong port has around 40% spare capacity, at the present level of management. Some investments have already been planned to further modernize these ports and enhance their operational efficiency. Decision has already been taken to involve private sector of global standing, to operate New Mooring Container Terminal (NCT), as a leaseholder. In order for the Railway to be one of the main modes of transport to carry the regional traffic, major projects which need to be implemented to facilitate efficient use of Chittagong Ports include, among others, the following:

* Recommissioning of Kulaura-Shahbazpur-Mahissasan (39 km), plus a transshipment facility near Shahbazpur. This project is proposed to be financed by Bangladesh Government's own resources.
* Construction of Akhaura-Agartala rail link (approx. 10.0 km), to be financed by an Indian grant outside US$ 1.0 billion line of credit (LOC).
* Double tracking of 3-major sections along Dhaka-Ctg. Route, to be financed by the World Bank, the Asian Development Bank and JICA for which funds are already committed. But the release of fund is tied to the “Reform of the Bangladesh Railway”, which is still pending with the Government.
* Construction of 2nd Bhairab Rail Bridge and 2nd Titas Rail Bridge, to be financed out of Indian US$ 1.0 billion line of credit (LOC).
* Construction of an ICD at Dhirasram near Tongi, to be financed under a World Bank project.
* Strengthen several rail sections, modernization of signaling and acquisition of rolling stock, to be financed from a number of sources.
* 2nd rail bridge on Jamuma, for which some of the funding is yet to be mobilized.

Photo: Jason Hawkes/GetyImages

Role of road transport
Since the major road network of Bangladesh has 2-lanes only, and they suffer from structural weakness, loaded Indian trucks can not be allowed to use these, until expressways are built on public-private partnership (PPP) basis using the right of ways (ROW) of the National Highways under the Roads and Highways Department (RHD) which are usually 40.0 metre wide. To facilitate movement of both national and regional traffic, a number of road sections, including: Brahmanbaria-Mainamati, Sutarkandi-Sylhet and Benapole-Jessore-Khulna need upgradation. As part of immediate solution, to carry some of the Indian high value commodities, Bangladesh road transporters could perhaps provide transshipment facilities from one border to another 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 (i.e. vehicles registered both in Bangladesh and India) for the company's multi-axle vehicles (truck trailers, covered vans, etc.). Double registration will allow these vehicles to pick up containers from origins inside India, Nepal and Bhutan, and move across Bangladesh to deliver goods to destinations without any transshipment at the border. This system could cut down transport cost appreciably. Setting up of such a company and for its smooth operation, strong political support of the 4-governments, would be essential.

Rohanpur-Kathihar-Birgunj
rail link
Nepal-Bangladesh bilateral trade is now allowed to move by road only through Kakarvita in Nepal, Phulbari in India and Banglabandha land port in Bangladesh.

However, as part of the Joint Communique signed between India and Bangladesh, export/import trade of Nepal is now expected to be allowed to use Mongla Port, which will involve a travel distance of around 1300 km by road. Thus availability of the above mentioned Rohanpur-Kathihar-Birgunj rail link for Nepal's third country trade to pass through Mongla Port, will provide an attractive alternative as it will involve a travel distance of around 900 km (See Map-3). However, this route will face tough competition from Birgunj-Kolkata route which is shorter, around 700 km. Birgunj-Rohanpur-Mongla route can remain competitive only if the dwell time in Mongla Port can be maintained as low as possible, and the transshipment facilities for containers at Khulna Railway station perform efficiently, including 44 km truck-trailer service between Khulna Railway station and Mongla Port.

Photo: Jason Hawkes/GetyImages

Since Kolkata port is already facing congestion and siltation problems, Mongla Port has a fair chance of surviving the competition, provided the port operations can be modernized supported by adequate infrastructure facilities and port charges are comparatively lower. To this end, Mongla Port has already taken up several projects to enhance efficiency. The port capacity is being modernized through installation of modern container handling equipments, undertaking dredging to increase draft of the main channel, introducing night navigation and dredging of outer bar. Major part of these investments are being financed by the Government of Bangladesh from its own resources.

Akhaura-Agartala rail link
At present, the Northeast India's connectivity on the Eastern side with Bangladesh by Railway is only through Shahbazpur/Mahissasan point. But the track between Shahbazpur-Kulaura has not been in use since 2002, as a result this link of 39 km needs to be re-commissioned, for which Bangladesh Government has already committed its own resources.

Another new link, Akhaura-Agartala (around 10.0 km) is going to be built soon through Indian grant outside US$1.0 billion LOC. The alignment has been finalized by the India-Bangladesh Joint Technical Group, and the recommendation has been submitted to the respective governments for approval. Once approved, a feasibility study will be undertaken and tender called for construction.

This Akhaura-Agartala metre-gauge link once completed, will become a direct competitor to existing Kulaura-Shahbazpur/Mahissasan link (See Map-4).

Ashuganj, a new
transshipment port
Two types of facilities are going to be established at Ashuganj IWT port. One of the first facilities to be developed will be for handling of Over Dimensional Cargo (ODC) for a power plant under construction at Palatana, Tripura. OTPC-ONGIC-Tripura Power Company will pay for developing facilities for handling and carrying the ODC. They will use multi-axle hydraulic vehicles to carry the ODC. Roll-on-roll off ferries are being arranged by the above mentioned power company to carry the ODC traffic upto Ashuganj.

Road between Ashuganj and Akhaura needs to be strengthen, particularly the portion Sultanpur-Akhaura (15km), which needs to be rebuilt to a higher specification. Some of the bends along that road , need to be straightened, to facilitate movement of the vehicles carrying ODC which may have upto 36 axles.

The Second facility to be developed in Ashuganj is the construction of a transshipment facility for containers. This will facilitate movement of containers, between North-East India and Kolkata region. Bangladesh is expected to make an investment of around 245.00 crore out of Indian Line of Credit (LOC) of $ 1.0 billion. Development of this facility will provide NE-India a shorter IWT-cum-road transport link to Kolkata. In the process, India will gain considerably in terms of transport cost savings per ton of cargo moving across Bangladesh, besides substantial time savings. Bangladesh should also be able to earn IWT charges, road transport charges, transshipment charges as well as “transit fees” (a part of the savings in transport cost per ton when the transit cargo will be traveling through a shorter route across Bangladesh viz-a-viz the existing long route through the chicken neck). The amount of “transit fee” to be charged shall have to be decided based on mutual discussion between India and Bangladesh to make it a win-win situation for both.

Container movement by
rail and IWT
As indicated earlier, there is no direct overland container movement between India and Bangladesh. All containers move along rail-cum-sea route via Mombai, Singapore and Chittagong. As part of the Joint Communique, direct container movement by rail and IWT would now be allowed. In this context, it may be noted that Jamuna bridge has no restriction for ISO containers movement. But there is a limitation on the number of trains that can pass through the bridge in 24 hours. It is learnt that the bridge is almost fully saturated as regards rail capacity. After crossing Jamuna Bridge, containers can move upto Dhaka ICD through dual gauge. An IWT container terminal in the public sector is under construction at Pangaon, and a few more private sector IWT container terminals are also under development, one by Rupayan and the other by Kumudini.

Photo: Star

BIWTA is trying to use its old Khanpur Jetty near Narayanganj for container handling, but because of poor accessibility and limited space availability, no private sector is finding it attractive to invest in that inland port.

These IWT terminals under both public and private sectors, when developed, will facilitate direct container movement between Kolkata and Dhaka as well as between Dhaka and Chittagong and Mongla-Dhaka. Self propelled barges to carry containers are already under construction by private sector in Bangladesh.

Benefits of Cooperation: Need to be win-win for all
As a follow up to joint communique, a number of studies were undertaken to get a feel as to which country would benefit to what extent if regional connectivity is established? These studies revealed that due to geographical proximity, and convenience of transport connections, certain states of NE-India would find it convenient and cost and time effective to use Bangladesh road, and IWT networks (See Map-5).

With the establishment of regional connectivity and opening of transit routes through Bangladesh, some of the traffic to and from NE-India to Kolkata region or Kolkata Port Trust (KPT) will get diverted. Table -1 shows the various routes passing through Bangladesh which could provide convenient and cost-effective connectivity to different parts of NE-Indian states, and Kolkata region. Three convenient nodal points in NE-India which were considered by some of the studies, are: Guwahati in the North; Silchar in the North-east; and Agartala in the South-east. The routes passing through these nodal points could cater to traffic originating from the following areas:
* Route through Guwahati will cater to traffic originating at Shillong and eastern parts of Maghalaya
* Routes through Silchar will be catering to whole of Manipur, Mizoram, and Nagaland, as well as southern parts of Assam
* Routes through Agartala will be catering to traffic from Tripura.

In addition to the above noted nodal points in NE-India, the studies mentioned above identified Phuentsholing as the nodal point for Bhutan, and Kathmandu for Nepal traffic.

Identification of routes through Bangladesh for transit traffic
Based on a review of the major corridors identified by the SAARC Multimodal Transport Study (SRMTS), completed in 2006, the following 14 routes were selected by some of the recent studies for further investigation. Assessments were made of each route with regard to their suitability to serve as the most cost effective and efficient route for transit traffic through Bangladesh, for traveling to the sea ports or for passing through Bangladesh to Kolkata region. These routes are expected to serve the needs of NE-India states, Nepal and Bhutan. Breakdown of these routes by mode are: Road corridors-8, Rail corridors-5, IWT corridor-1. Details of these routes are as follows:

Analysis of the routes and costing
The recent studies referred to earlier, made an attempt to determine the cost of moving one ton of cargo along different routes. Costing was done along a link as well as across nodes (ie border points, transshipment points, sea ports, ferry points, etc.)

For smooth movement of traffic along a route both links and nodes need to perform efficiently. Any delay at the node(s) or along the link would increases cost of transportation per ton. An attempt was, therefore, made to analyze thoroughly each of the routes, to identify the possible links and nodes where improvements are necessary, for which investment would be needed.

To facilitate smooth movement of transit traffic through Bangladesh via road, rail, and IWT-cum-road, agreements need to be signed between Bangladesh and neighbouring countries. Usually transit traffic is not subjected to customs duties and taxes at the land ports and very little time should be required at the border to check and allow transit traffic to pass as a bounded cargo. Charges, for handling transit traffic should, therefore, be nominal.

One of the recent studies also worked out the comparative cost of moving goods from NE-India to Kolkata region along new routes across Bangladesh viz-a-viz the cost along the existing route via the “chicken neck”. In view of costs and time savings and reduced travel distances, along the new routes across Bangladesh, complete or partial diversion is expected to take place along all the 13 routes.

Estimation of benefits
A. Benefits to Bangladesh
When Bangladesh will allow regional freight traffic from NE-India, Nepal and Bhutan to transit across its territory, following categories of benefits could accrue, depending on the routes and facilities used:
* Transport charges, (in terms of rail freight charges, or road transport or water transport charges)
* Port charges (for international traffic using the sea ports)
* Border crossing charges at land ports for transit traffic
* Toll charges for major bridge (like Jamuna Bridge)/ferry charges, etc.
* Transit Fee: to be charged particularly when there are large savings in travel time and transport cost, per ton of cargo, as traffic start moving through shorter route vis-à-vis the original longer route. This would make it a win-win situation for both India and Bangladesh. The share is usually decided through discussion between the countries involved.

B. Benefit to users countries
(India, Nepal and Bhutan):
Benefits that will accrue to user of transit facilities may be categorized as (i) static benefits such as transport efficiency in terms of time and costs, as well as productivity gains, and (ii) dynamic benefits, such as employment creation, poverty reduction and trade creation, etc. which will be estimated at a later stage.

Once the regional transport connectivity through Bangladesh is established, the users of transport services are expected to benefit from:
* lower transport costs due to establishment of shorter and direct routes through Bangladesh, and
* time savings due to reduction in travel time, mostly due to shorter routes.

In case of Indian transit traffic movement through Bangladesh, India will also benefit through earning of transport charges (rail or road transport charges) for the segment of the route that belong to India. For example, if a truck trailer carries a container from Kolkata to Agartala, India will earn the transport charges for the segments Kolkata to Petropole, and from Akhaura to Agartala, while Bangladesh would earn transport charges from Benapole to Akhaura.

Corresponding to the “transit fee” that Bangladesh is expected to earn, India will also earn a sizeable benefit by retaining a large share of the transport cost savings per ton of cargo, for using shorter transit route through Bangladesh.

From an analysis of cost savings along different transit routes, it appears that all the countries involved namely Bangladesh, Bhutan, India and Nepal would get sizeable benefits when regional transit traffic starts moving across Bangladesh. Analysis further shows that percentage of savings per ton could range between 12% to 76%. Highest savings (76%) could be expected along Agartala-Akhaura-Chittagong port by rail viz-a-viz Agartala - Kolkata port via chicken neck, while the lowest savings (12%) could accrue along Guwahati-Tamabil-Chittagong port by road viz-a-viz Guwahati - Kolkata port via chicken neck.

Assessment of likely traffic
An analysis of geographical location of certain NE-India States revealed that due to their physical proximity to Bangladesh, and convenience of transport connectivity with Bangladesh by road, rail, and IWT-cum-road transport, sizeable traffic could get diverted to shorter routes through Bangladesh.

Analysis revealed that there could be 100% diversion of inter-state and international traffic from the states of Monipur, Nagaland, Mizoram and Tripura. On the same logic, partial diversion could occur from South-eastern part of Assam and eastern part of Meghalaya. One of the recent studies assumed that around 35% of traffic from Assam particularly from Karimganj, Silchar, Lumding etc. and 50% of traffic from Meghalaya could be diverted. Another conservative study, however, expressed the view that there may be no diversion from Assam and Meghalaya. But majority of the studies are in support of sizeable diversion from Assam and Meghalaya.

Similar analogy was applied to Nepal and Bhutan as well. It revealed that 50% of freight traffic to and from Nepal could potentially be diverted, while for Bhutan 100% diversion along Bangladesh routes is possible. The partial diversion of the Nepalese traffic is due to cost disadvantage of rail corridor Birgunj-Rohanpur-Mongla port vis-à-vis Birgunj-Kolkata which is shorter by 200 km.

In the light of the above analysis, potential transit traffic was estimated to range between 3 and 18 million, depending on conservative and optimistic assumptions of potential traffic diversion. Out of the optimistic assumption of transit traffic, around 10% is expected to be international traffic and the rest would be inter-state traffic.

It is important to note here that the above transit traffic scenario only covers the “diverted traffic”. Once transit traffic movement starts, there would be sizeable “generated traffic” as well. Although NE-India is rich in natural resources, these could not be exploited so far in the absence of access to sea ports. Since Bangladesh has agreed to allow India to use both Chittagong and Mongla ports, the natural resources of NE-India could now be exploited through Joint Venture between Indian and Bangladeshi investors, with the prospects of exporting the industrial outputs through Bangladesh ports. Thus the actual benefit to Bangladesh and India, from transit traffic movement could be much more than what has been estimated so far.

Investments needed to improve Bangladesh transport system
During 2008-2009, Bangladesh has prepared a draft Integrated Multimodal Transport Policy (IMTP), which is already with the government for consideration and approval. Within the framework of the draft IMTP, sectoral “Master Plans” were prepared for roads, railways and inland water transport. Investment requirements were projected for a 20 year period, in 4-phases of 5-year each.

Meanwhile in order to meet the commitment made by Bangladesh as part of the Joint Communique signed between India and Bangladesh in January, 2010, a number of projects are required to be implemented on a priority basis. Currently Bangladesh transport system is not fully geared to carry entire regional/transit traffic. Currently Bangladesh has connectivity with NE-India only by road which again has structural weakness and these roads are entirely 2-lanes. As a result, these are highly accident prone and could play only marginal role in carrying transit traffic.

Railway and inland water transport should, therefore, be the main mode of transport to carry regional traffic. NE-India is, however, not yet connected with Bangladesh by railway on the eastern side. The only rail link Kulaura-Mahissasan/Shahbazpur (39 km) which was in use till 2002, is yet to be recommissioned, and may take 2-3 years to be operational. Another new rail link Agartala-Akhaura (around 10.0 km) is still to be built, and may also take 2-3 years to be operational.

The new inland water transport (IWT)-cum-road transport link is also not ready as yet. A new transshipment facility at Ashuganj is still to be completed. The road link between Ashuganj and Agartala also need to be upgraded to carry Over Dimensional Cargo (ODC), as well as for subsequent use as one of the transit routes.

A detailed analyses has been carried out of the various investments needed to improve the Bangladesh transport system to ensure continued national growth of more than 6%, as well as to carry the anticipated regional traffic. It appears that over the next 5-7 years, sizeable investments in the range of US$ 5-7 billion would be needed to bring the Bangladesh transport system into full gear to carry entire transit traffic, as well as to support continued higher national economic growth.

India's financial assistance
As part of the Joint Communique signed by India and Bangladesh in January, 2010, Prime Minister of India announced a line of credit (LOC) of US$1.0 billion for a range of projects, including railway infrastructure, supply of BG locomotives and passenger coaches, rehabilitation of Saidpur Railway Workshop, procurement of buses including articulated buses, and dredgers, construction of some road links, and transshipment facility at Ashuganj.

It is to be noted that this is India's largest loan ever given to any country. The loan carries 1.75% interest per annum, and is to be repaid over a period of 20 years, with a provision of 0.5% commitment fee per year on unused credit after 12 months from date of contract approval.

So far around 14 projects have been identified costing around US$601 million. But the power gridline of 400 KV inter-connector between Bheramara and the border costing US$150.86 million is proposed to be financed by ADB. Thus the net commitment for 13 identified projects comes to around US$451.00 million, and projects for using the remaining US$550.0 million is still to be identified.

Out of 13 projects, 8-projects are of direct Bangladesh-India interest, 3 are only of Bangladesh interest and 2 projects namely, (a) transshipment port at Ashuganj and (b) reconstruction of Sarail-Brahmanbaria-Sulanpur-Akhaura-Senarbadi road are directly related to development of facilities for transit traffic. The 8-projects of Bangaldesh-India interest include: (i) 6-high powered dredgers (ii) 10 BG locomotives (iii) 125 BG passenger coaches (iv) 60-tank wagons with 2-break vans (v) 50 MG flat wagons plus 5-break vans (vi) 2nd Bhairab and 2nd Titas Bridge, (vii) construction of Ramgarh-Sabroom road to provide connectivity with BD at the Southern end of Tripura, and (viii) capacity building of BSTI laboratory and its staff.

To expedite utilization of the remaining amount of Indian LOC, Bangladesh needs to identify suitable projects in consultation with India, at the earliest.

The political leaders of India and Bangladesh through their New Delhi Summit on January 10-12, 2010 set the tone for a long lasting regional cooperation in the area of connectivity and other areas of concern, covering water sharing, land boundary demarcation, resolving maritme boundary, removal of NTBs, etc. While most of the outstanding problems have been flagged by the Joint Communique, the real benefit will accrue only when the commitments are honoured by both the governments and necessary actions taken to address the outstanding problems.

With regard to transit related issues, Bangladesh government is seriously implementing the various understanding reached at New Delhi. Once the priority facilities have been developed properly as programmed, transit traffic from NE-India, Nepal and Bhutan would find it attractive to transit through Bangladesh, and use its ports. The savings of transport cost for the transit traffic could range between 12% to 76% depending on the transit route being used, besides considerable time savings, due to shorter trip lengths.

According to optimistic estimates, potential transit and international traffic could be around to 18.00 million tons of which inter-state traffic could be around 16.00 million tons and international (including Nepal & Bhutan) could be around 2.00 million tons. These are diverted traffic only. Once regional traffic movement starts across Bangladesh and NE-India gets access to the Sea Port of Chittagong, there would be enough incentive for the exploitation of untapped natural resources, where Bangladesh should also get an opportunity to invest in joint venture projects in NE-India. Such developments would give rise of large scale generated traffic, with consequent employment generation and several other types of multiplier effects.

Regarding the mode of transport, Railway and IWT shall have to carry most of the transit traffic. In order to facilitate movement of high value and perishable commodities across Bangladesh, a network of expressways (toll roads) need to be developed through involvement of private sector on BOT (build, operate and transfer) basis.

In order to make the Bangladesh transport system fully in gear to carry both the anticipated transit traffic and also the projected national traffic, considerable investment of around 5-7 billion dollars would be required over the next 5-7 years. Against this requirement, India has offered US$1.0 billion Line of Credit @1.75% interest per annum. Bangladesh shall have to mobilize rest of the resources, of which some are already in the pipe line. Initially Bangladesh transport system can perhaps carry around 10% of potential transit traffic, and it may need another 3-5 years to put its transport system in full gear to start carrying the entire transit traffic.

Dr. M. Rahmatullah is former Director, Transport UN-ESCAP, Bangkok.