Infrastructure News

Strained infrastructure in Bhairahawa dents trade growth

Revenue collection at Bhairahawa Customs Office in south-western Nepal has swelled 16 times in the past decade from Rs5 billion in fiscal 2007-08 to Rs82 billion in 2017-18. In the last fiscal year 2019-20, despite the Covid-19 pandemic, customs revenue exceeded Rs70 billion.

More than 700 freight trucks enter Nepal daily through the Bhairahawa Customs Office located on the southern border with India, making it the country’s second busiest transit point for commerce. A decade ago, the number was around 250 trucks.

The increased traffic has exposed the woefully inadequate parking facility constructed back in 2005. Traders say parking infrastructure has not been able to keep pace with the growth in business, and has created hassles for them.

Traders have been repeatedly asking the government to facilitate import and export by expanding the parking lot at Bhairahawa Customs. Everyday, due to lack of parking infrastructure, freight carriers arriving in Nepal are stuck in a massive traffic jam extending up to 10 km on the Indian side of the border.

According to traders, sometimes the line of trucks stretches 20 km on the Indian side. Truck drivers often complain that they are forced to spend at least four days to get their cargo cleared.

Traders are hugely concerned by the delays and have started rerouting their imports.

“I have been importing goods like rice, wheat and coal through the Suthauli Customs Office in Kapilvastu for the past few months to avoid the congestion at Bhairahawa,” said Arun Goenka, managing director of the Goenka Group.

“Importing goods through the Bhairahawa border point adds many days to the travel time to reach our warehouse which increases the cost of production. As an alternative, I have started using a different route.”

Goenka said he was also thinking of rerouting other industrial raw materials including iron blades.

Rajesh Agrawal, a central member of the Federation of Nepalese Chambers of Commerce and Industry and managing director of the Siddhartha Industrial Group, has been thinking of using the Krishnanagar border point for his imports.

“It’s not a choice but compulsion.” He said either route increases his cost of production, but the goods reach his warehouse faster by using alternative roads.

“Indian shipping companies do not want to transport goods through the Bhairahawa point because of the longer turnaround time,” he added.

The government has not shown any interest in expanding the parking yard at Bhairahawa Customs, Agrawal said.

According to traders, the route through the Bhairahawa point has become inconvenient and more expensive. They have to pay extra charges like demurrage and detention that increases their production costs.

Traders claim that demurrage and detention charges come to around Rs15 million daily.

According to Goenka, importing coal from Gujarat, India used to cost Rs3,200 per tonne, but now it is costing more than Rs4,000 per tonne due to delays.

Importing a container of mustard through Bhairahawa customs point costs Rs68,000 more than when importing it through Birgunj.

Customs officials admit that the existing infrastructure does not match the growth in trade. A study conducted two years ago showed that it takes about 19 hours for a cargo truck to be checked and released after entering the customs area.

The study shows that importers spend 14 percent of this period at the customs office and the rest of the time on completing the paperwork, said Maniram Poudel, chief of the Bhairahawa Customs Office.

“Lack of parking infrastructure is the key cause of the problem,” Poudel said.

According to Poudel, the parking lot at Bhairahawa Customs can hold 1,000 vehicles only. About 700 cargo vehicles arrive in Bhairahawa daily from India.

The customs office opens early in the morning, but traders do not arrive early to clear their cargo. As a result, the line of freight trucks does not move, and this leads to traffic being backed up for many kilometres on the Indian side, according to customs officials.

“It is the responsibility of traders and their agents to clear the goods from the customs as soon as possible after completing the necessary paperwork,” said Poudel.

He claimed that if the imported goods and vehicles were released from customs on time, the parking lot would be vacated. “But it takes a long time to release the trucks from the customs due to delays in the customs process from the traders’ side.”

Poudel claimed that importers do not use the facility to make self-declaration online remotely to speed up customs clearance. The banks located at the customs become crowded only after 4 pm with everybody coming to pay their customs duty at this time, he added.

Traders, for their part, accuse customs officials of hiding their shortcomings. “This is baseless,” said Agrawal. “They do not build infrastructure and instead blame traders for delaying,” he added.

Agrawal said that if the parking facility was increased to accommodate 3,000 vehicles, the problems would be resolved immediately.

According to Agrawal, it takes up to 18 days for his industrial raw materials to arrive at the factory which is 18 km from the border at Nautanwa, India.

Goods carriers using the Raxaul checkpoint make 50 trips per month while those using the Sunauli-Bhairahawa checkpoint barely make six trips per month.

Agrawal said that instead of transporting cargo directly to Bhairahawa, which is 125 km from Gonda, an industrial area near Gorakhpur in India, Indian truckers and Nepali traders prefer to use the Krishnanagar, Kapilvastu route which is 250 km away.

The traffic jams bring other problems to truckers. According to traders, Indian police demand money from them in the name of managing the queue. Those who pay are allowed to jump the queue. Indian truckers simply add the extra costs to the transportation charges, Agrawal said.

Driver Dharmendra Ven, who arrived at Bhairahawa Customs with vehicle bearing registration number RJ 14 GF 9833, said that he spent four days in the line that was 8 km long.

“There is no provision for eating and sleeping in the middle of the road, nor are there any toilets,” he said. “The villagers do not allow us to go to the fields to relieve ourselves.” he added. The police demand up to Rs1,000 to move us up in the queue, he said.

Traders have repeatedly urged authorities to use the land that has been bought to build an Integrated Check Post in Bhairahawa as a parking yard to ease the problem.

Ravi Parikh, manager of the Bhairahawa branch of Trans Nepal Freight Services, which manages the customs parking lot, said that it had become tough to manage the growing number of cargo vehicles in the limited parking lot.

He said that the problem had been compounded by the tendency of traders to work slowly to get their cargo cleared through customs, or not remove their trucks even after the paperwork had been completed.

According to Ashim Neupane, president of the Bhairahawa Customs Agents Association, Siddharthanagar, Rupandehi, Bhairahawa Customs collects Rs350 million in revenue daily, and one day’s collection would be enough to create a better parking lot.

He said that despite repeated pleas to the finance minister, deputy director-general of the Department of Customs, Ministry of Industry, Commerce and Supplies, and other high-ranking officials, no one had bothered to explore a solution to the problem. 

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