Saturday, September 17, 2011

Should Not India Pay Transit Fees?

Should India pay the transit fees? It is a big question now at a time when a hide and seek is further adding confusion as to whether or not the Awami League government has already given the facility to the neighbour to go to its north-eastern states from the mainland in the west.
Another question is, whether it is a transit facility which is used to go to a third country as against a corridor which India is trying to obtain by all intent, to carry its goods and passengers from one end to the other. 

Irrespective of this debate a growing confusion is widespread as to whether India should pay transit fees. President of India-Bangladesh chamber of commerce and Industry (IBCCI) Matlub Ahmed at a seminar in the city last week said India should pay the transit fees. 

Contrarily, the Prime Minister’s two advisers, Dr. Moshiur Rahman and 
Dr. Gowhar Rizvi, have always maintained that Bangladesh should not demand transit fees from its neighbours. Then the question arises, critics say, who will pay for the cost of infrastructure development in building new roads, railways, ports and dredging the waterways which are supportive to operate the system.
India should share
So Matlub Ahmed said India should agree to share the ‘cost saving’ from which it will benefit by making the transportation path shortcut. It is quite logical, he said adding it represents a win-win situation on both sides. 
But Gowhar Rizvi again insisted last week in the wake of IBCCI president’s 
remark that Bangladesh should not demand share from the Indian cost saving. His argument reads as such: if Bangladesh demands transit fees, India will not be interested to using transit at a large scale and only a system which is free from payment of fees can lure India to using it at full capacity.

This is an outlandish argument on the part of an adviser to the Prime Minister provoking critics to question as to whose interest the adviser is looking after holding a crucial post of the Bangladesh government. The apprehension may be exaggerated, but the question remains how he can justify it. 

And he is not alone. Another adviser, Dr Moshiur Rahman who is also working closely on the issue, even had earlier written to the NBR and the ministry of shipping and commerce asking them not to impose any transit fees. He was instrumental in scrapping an NBR circular last year which had levied transit fees of Taka 10,000 for a container loaded with transit bound cargo and Taka 1000 for per tonne loose merchandise. 
The circular led to a crisis as India refused to pay the fees while two cargo vessels  remained stranded over a week at entry point of Bangladesh waters coming from Kolkata port and moving towards Ashugonj river port.

Now India is willing to pay transit fees but its opposition is coming from no other positions but from top advisers of the government handling the transit issue. Dr Moshiur Rahman even went to the extent of saying that demanding transit fees will be tantamount to an ‘uncivilised’ act from an ‘uneducated’ nation.
When this sort of debate is on the rise, senior elected leaders should clearly speak out the government’s political position on the issue at a time when critics wonder whether the advisers are fighting through a situation marred by conflict of interest. 
Infrastructure cost
Speaking on the issue Dr Akbar Ali Khan recently said, if India does not pay for  the cost of infrastructure investment then where the money will come from to repay the loan that Delhi has given to Bangladesh to build necessary infrastructures. 

He said the construction of the Ahugonj river port alone will require Taka 300 crore  to be paid back over the next 20 years. It means Bangladesh will be required to pay Taka 15 crore per year on principal amount against the loan for the port.  Who will pay it, he wondered and then how the money for the payment of the  billion dollar loan could be mobilized. Should Bangladeshi tax payers take the load from which India will benefit, he wondered adding the repayment issue may create a critical situation in future. 

The Indian billion dollar loan is not the only major investment; Bangladesh may be required to put a total of at least seven billion dollars investment in the next few years to build the transit infrastructures including the Padma mega bridge. 

If India is not paying and sharing its cost saving, how will Bangladesh pay for it  for which the advisers are not having a direct answer? 

Chairman of the Bangladesh Tariff Commission Dr Mujibur Rahman recently  focused on the issue saying the cost recovery of the infrastructure development should not be directly linked to transit fees. 
He said there is no direct relation with it and hoped the government will be  able to master enhanced revenue in future as the economy will grow as a direct boost from transit. Here more service sectors will grow like hotels and restaurants, more clearing forwarding agencies will operate, more buses and trucks will ply to lead to greater revenue collection. Moreover, India is likely to pay charges against services at different levels in Bangladesh to contribute to revenue collection.

This is how the transit fees may be serviced from additional income to come  from expansion of domestic economic activities, he argued. But the question is, where the impediments lie to demand the fees, there is no answer from the establishment on this question at this moment. 

A question to finance minister on the billion dollar Indian loan at a seminar  in June this year as to why all supply should come from India against the loan was instantly turned down as ‘nonsense’. The nation is more confused now as contradictions are only growing related to transit infrastructure financing and such other cost recovery issues when India is already using Bangladesh facilities without formal transit accords.

BY :  Faruque Ahmed.