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How is transshipment working out for Bangladesh?

  • Published at 06:15 pm July 5th, 2021
Chittagong port
Chittagong port Dhaka Tribune

Not very well, but the reason are not what critics think they are

A lack of necessary infrastructure and insufficient equipment for the weighing and handling of goods are behind the slow movement of cargo under the transshipment agreement with India, government officials have said.

Poor highway connections with the neighbouring country and the Covid-19 pandemic have also heavily hampered transshipment, they added.

In addition, the current fee structure is also a hurdle to Indian business using the transshipment facilities. 

Bangladesh’s National Board of Revenue (NBR) has fixed six types of tariffs on Indian goods against different services such as Tk254 per container for scanning, Tk. 100 per ton as security charge, Tk. 100 for administrative charges etc. And, Foreign Affairs Ministry of Bangladesh has already shared the detailed fees to the High Commission of India in Dhaka on July 5, 2020.  

During the trial run of transshipment in July 2020, Bangladesh collected the customs and fees according to the schedule that they shared with India.

However, Akter Hossen, second secretary (Customs International Trade and Agreement) told Dhaka Tribune, the customs and fees are still not finalized as “we’re yet to get Indian concurrence.”   

An Indian High Commission spokesperson in Dhaka said, for transshipment operation to move forward, its commercial viability is very important and “this viability can only be established if charges are reasonable and business-friendly, for the mutual benefit of businesses on both sides of the border.” 

Fees and the use of Bangladeshi vehicles, however, are key components of Bangladesh getting benefit through the process.

What are the transshipment routes?

Under the Protocol on Inland Water Transit and Trade (PIWTT), cargo may arrive at Ashuganj river port from Kolkata by waterways and go to Akhaura land port using trucks to enter Tripura and Assam. Transshipment through Bangladesh reduces the cargo's travel time from 25-30 days to 10-15 days.

According to the standard operating procedure, goods reaching Chittagong and Mongla sea ports will be carried by road, rail, and water routes to Agartala (Tripura) via Akhaura, to Dawki (Meghalaya) and  Tamabil and Sutarkandi (Assam) via Sheola, and to Srimantpur (Tripura) via Bibirbazar.

In October 2018, Bangladesh and India signed the SoP under the agreement on the use of Chittagong and Mongla ports for the movement of goods to destinations in India.

However, according to the Bangladesh Inland Water Transport Authority (BIWTA), no cargo vessel has arrived at Ashuganj river port in Bangladesh from India under the Protocol on Inland Water Transit and Trade (PIWTT) since 2019.

Furthermore, Chittagong Port Authority sources said no cargo vessel had anchored at the port under the transshipment agreement with India since a trial run was completed in July last year. No container has passed to the north-east Indian states through Mongla port either.

Infrastructure development in Ashuganj

Officials concerned at Ashuganj river port said the government had only been able to complete land acquisition for transshipment in the last five years, and tenders for the development of related infrastructure were yet to be floated.

However, all of the projects related to transshipment, such as the development of an inland container port at Ashuganj at an estimated cost of Tk1,293 crore, are scheduled for completion under the Indian Line of Credit (LoC) by end of 2021.

Also Read- Where do things stand with transit of goods to Nepal and Bhutan?

The upgradation of the existing 50km Ashuganj-Akhaura road to a four-lane highway is also progressing at a snail's pace, officials have said. The Indian construction company AFCONS Infrastructure Ltd has been assigned to implement the project at a cost of Tk3,000 crore under the LoC.

Shipping Minister of State Khalid Mahmud Chowdhury said: "We are trying to develop infrastructure and the road network as quickly as possible at Ashuganj river port so that we can resume transshipment."

How much income can be generated through Ashuganj? 

Bangladesh and India agreed under the PIWTT agreed upon that a transit fee of Tk192.22 per ton would be paid to the government of Bangladesh for goods to be transshipped.

So far, the government has earned Tk35.60 lakh for the transshipment of 18,377 tons of goods from India through Ashuganj river port since transshipment officially began.

State Minister for Shipping Khalid Mahmud Chowdhury said: "We will benefit more from transshipment once all the infrastructure is ready.

"India is funding the infrastructure projects due to the friendship with Bangladesh," he added.

 Chittagong port

Chittagong port is comparatively more usable for transshipment and the connecting road is adequate, but Indian businessmen are reluctant to use transshipment facilities amid the surge in Covid-19 and also due to the fee structure.

Four containers of a consignment carried under the transshipment agreement were successfully transported to the Indian states of Tripura and Assam through Chittagong port in July last year.

However, after the first transshipment, India did not send any more containers through Chittagong port.  

"We are ready to handle Indian containers as per the deal, but we are not getting any response," said Zafar Alam, joint secretary and member (admin and planning) of Chittagong Port Authority.

A spokesperson of Indian High Commission in Dhaka said: "To jumpstart the regular commercial transshipment services under this agreement, the fee and charges currently under negotiation between India and Bangladesh remain to be finalized. These include the administrative fee (to be collected by NBR), port charges (to be collected by concerned ports) and a proposed road fee (to be collected by Road & Bridges Ministry). It needs to be borne in mind that this operation will move forward if it is commercially viable. And this viability can only be established if charges are reasonable and business-friendly, for the mutual benefit of businesses on both sides of the border."

State Minister Khalid Mahmud Chowdhury said: "We are not getting benefits from the transshipment agreement [with India] due to the ongoing Covid-19 pandemic. It is hampering trade and delaying the implementation of infrastructure at ports and highways."

Centre for Policy Dialogue (CPD) Distinguished Fellow Prof Mustafizur Rahman suggested infrastructure projects related to Ashuganj river port and the highways were being delayed because of the negligence of officials concerned.

"The positive side is Bangladesh and India have signed significant agreements on transit and transshipment, but the agreements will not be effective until the initiatives and infrastructure on transshipment become operational,” he told Dhaka Tribune.

"Businessmen and traders will use the transshipment routes once services at customs are comfortable, reducing travel cost and time," he added.

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