Connectivity of Nepal with Neighboring Countries

 

Connectivity of Nepal with Neighboring Countries

General meaning of connectivity is the state of being connected or interconnected. Connectivity is not limited to connection between two countries by road, rail, water and air only but also through transmission lines, energy grids, IT, optical fiber networks, oil and gas pipelines and cross boarder infrastructure. In addition to this soft connectivity includes people to people contact, tourism, free trade and investment zone, regional economic integration and policy harmonization. Connectivity is sometimes understood as bilateral connectivity with neighboring countries, but it has broad concept with sub regional, regional and internal regional connectivity. Basically, a nation has two types of national interest which are primary national interest and secondary national interest. Primary interest are protection of country’s territory, sovereignty and independence. Secondary interest can be understood as the interest of the people and their property outside the territory of country and prosperity of people and nation. Due to international law, principles of Panchshel, UN charter and provisions of global and regional governance, primary national interest are not at so much risk compared to secondary national interest. The secondary interest of small economies like Nepal is however threatened by their more powerful counterparts. Connectivity if regarded important for the following reasons:

a.      It improves economic integration.

b.     It facilitates trade, transit and investment.

c.      It boosts tourism

d.     It increases opportunities for the business

e.      It increases social integration

f.      It increases productivity and decreases the cost

g.     It contributes to environment, food and energy saving

h.     It contributes to an inclusive economic growth

 

Cross Border Connectivity

Nepal shares 1801 km open border with India where people can cross boarder without any hindrance. However, the cross-border infrastructure in those areas are very poor. Nepal & India are jointly constructing integrated boarder check points ICP, which facilitates the trade transit and movement of the people.

a.      Biratnagar - Jogwani

b.     Birgunj – Raksaul

c.      Bhairahawa – Sunauli

d.     Nepalgunj – Rupaudiya

An agreement has been done between India and Nepal to address the issue of trade and transit. For trade 27 border post and for transit 15 border post has been fixed by both the countries. Between India and Nepal, currently there are two railways links Janakpur-Jaynagar (26 km) and Birgunj-Raksaul (5 km). According to the agreement on 2004 AD, Nepal railways get access up to inland container Depot (ICD) in Birgunj. For road transportation, the agreement was done in 2014. However, the operation is not regular. For cross border transmission of petroleum products and supply of natural gases, both the countries are involved in construction works. There has been agreement between Nepal oil corporation and Indian oil corporation in this regard. For the electricity transmission line, both the countries are constructing the inter border transmission lines. Latest inauguration was done for Dhalkebar – Mujarpur transmission line. Power trade agreement in 2014 has supported Nepal for the development of hydro sector and for the foreign investment in hydro sector. Connectivity between Nepal and India is enhanced by optical fibre network. Different infrastructures ahs been constructed in the border area of both countries. However, it is important to increase the quality of infrastructure.

Between China and Nepal, Tinkar (Darchula), Hilsa (Humla), Korala (Mustang), Syfrabusi (Rasuwa), Tatopani (Sindupalchowk), Lamabagar (Dolakha), Kimathanka (Sankhuwasabha) and Olangchulang (Taplejung) are the border post. However, difficult geographical terrain and weather condition creates hindrance for easy connectivity. China has improved the road infrastructure and other infrastructures in border areas, but unfortunately quality of infrastructure in Nepalese side is deemed to be poor.

Both countries have made an agreement for bilateral trades and transit. The agreement on trade and transit on 2016 has improved the connectivity between Nepal and China. Both countries have agreed for cross border transmission line and optical fiber connectivity. Up to 2022, China is going to bring railways to border of Nepal and then has proposed to connect railways from border to Kathmandu, Pokhara and Lumbini. Nepal has signed MOU for ambitious project one belt and one road (OBOR) which deems to increase connectivity of Asian countries & Europe through silk road. It will improve Rasuwa- Kerung roadways. Similarly, Nepal can be connected to the project of China, Myanmar, India & Bangladesh. Along with this, it may connect Gwadar port in Pakistan through China- Pakistan economic corridor (CPEC).

Sub Regional Connectivity

In regional level, Nepal has made agreement on BBIN (Bangladesh – Bhutan- India- Nepal), but the agreement with Bhutan is still remaining. With the financial assistance of ADB, South Asia sub-regional economic cooperation (SASEC) project is in operation. Especially, transport connectivity, energy sector, trade and transit facilitation, economic corridors, Information highway are the goals of this project. Under this agreement there are 46 projects out of which 17 projects are under construction in Nepal.

Regional Connectivity

The agenda of regional connectivity started with the establishment of SAARC in 1985 AD. In regard to this, there is agreement on SAFTA which is currently under implementation. For the trade between SAARC nations, an agreement SATIS (SAARC agreement in trade in service) is also completed. Similarly, on regional level agreement for transit and investment is under discussion, but SAARC is among least integrated region among the world which has very low intra-regional trade, about 5%.

The SAARC summit conference in 2014 organized by Nepal approved SAARC multi modal regional transport study (SMRTS). 10 regional road corridors, 5 regional rail corridors, 2 regional inland waterway corridor, 10 maritime Gateways and 16 aviation gateways are identified. Among these 5 roadways and 2 railways will connect Nepal directly to regional level.

BIMSTEC transport infrastructure and logistics study (2009), UNESCAP promoted by project for regional connectivity (Asian Highway, Trans-Asian railway and Asia-Pacific information super-highway) has opened a door for future economic and diplomatic benefits.

Air Connectivity

Although Nepal has made agreement with more than 3 dozen countries for the aviation service, the operation of aviation service is limited to few countries. Previously, Nepal had started flights to London, Paris, Vienna, Frankfurt, but now these flights are closed due to the ban by European Union. The flight to some cities in India and China and the capitals in SAARC nation (Islambad, Male, Colombo and Kabul) has not been started yet.

Economic Corridors

Economic corridors contribute in economic connectivity and interdependency in regional level. It requires integrated boarders, Harmonization of infrastructures, distribution networks, free trade zones, policy reforms and harmonization, economic liberalization. However, the reforms and progress towards this direction is not enthusiastic.

Nepal did a single package treaty on transit and trade in 1950 AD, but later separate treaty has been made on transit & trade. Latest treaty on transit was made in 1999 AD and was renewed for the first time in 2006 AD and second time in 2013.

Due to difficult geographical terrain, the connectivity between China and Nepal is quite challenging. However, as an alternative way, GON has prioritized the trade and transit with China. Along with this, both the countries signed trade & transit treaty in March 22, 2016 which opened the door for Nepal to use land of China to reach sea Port. There is a provision of review of treaty in every 10 years, but it is urgent to build & upgrade safe and efficient road connectivity with China.

 

Major Problems in Connectivity

a.      Fragmented surface transport networks

b.     Ineffective and weak transport agreements

c.      Weak air connectivity

d.     Poor state of Infrastructure

e.      Geographical barriers

f.      Political issues

g.     Absence of policy harmonization

h.     Weak regional cooperation/least integrated region

i.       Lack of proper utilization of available funding

j.       Non implementation of reports (SRMTS, Asian highway)

k.     Lack of national interest in treaty proposals

Ways ahead

·       Operationalization of available connectivity and transport transit networks (ex: Ports & routes)

·       Implementation of transit and other agreements with China

·       Regional transit and transport agreements

·       Connectivity thrust on the BBN, BIMSTEC and SAARC

·       Gaining from OBOR- establishing the missing links

·       Policy harmonization

·       Liberalization of trade in services- ex: SATIS agreement

·       Implementation of free trade agreement (SAFTA)

·       Integration into supply and value chain

·       Regional investment protection treaties

Shifting from land locked to land linked

·       Regaining Nepal’s historic significance in trade

·       Inclusion in the OBOR networks

·       Clear concept of transit economy

·       Policy harmonization, bilateral and regional agreement

·       More proactive diplomacy

·       Implementation of treaty and agreements

·       Action plans and projects

·       Utilization of funds (ex: BRICS development bank, Silk road fund, WB, ADB)