Chovar Dry Port is Likely to be a White Elephant for Some Years

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Chovar Dry Port is Likely to be a White Elephant for Some Years

R.B. Rauniar is the managing director of Interstate Multimodal Transport Pvt Ltd. He is widely regarded as the pioneer of interstate multimodal transport and dry port in Nepal. Only a few know that Rauniar started the country’s first chemical fertiliser plant. The government later nationalised it. New Business Age recently talked to Rauniyar focusing on the ups and downs of the Nepali business sector over the past six decades. Excerpts :

Please tell us about your family background and entrepreneurial journey.
I was born in Kathmandu. I was brought up in our ancestral home in Wotu. My father was also born in this house. Later in 1952, we moved to Makhan. I studied till ICom. Though I also studied BCom, I couldn’t clear the examination. I had started involving in family business even during my college days. My grandparents were involved in the clothing and silver business. Silver coins were in circulation during the Rana regime and we used to supply silver to the minting department. But the silver business gradually declined and we focused on the textile business.

How was the textile business at that time?
Most of the clothes used to come from India. But after the Second World War, textiles started coming to Nepal in quotas from countries like Japan, England and Italy. My grandfathers were recognized as ‘Battisakothi Mahajan’. We got the recognition even during King Mahendra’s rule.  We were the official importer of clothes and textiles at that time. It was easier to import from India. But we were facing difficulty in clearing clothes imported from other countries in Kolkata. To solve the problem, my grandfather opened an office in Kolkata. We were doing customs clearing and forwarding business at that time. Interstate transport is also a clearing and forwarding transport agent. I have given continuity to this business started by my grandfather.

Could you please elaborate more on how you entered the clearing and forwarding business?
I was involved in clearing and forwarding business even during my school days. Our shop was on the second floor of our house in Wotu. At that time, it was common to name business after fathers and grandfathers. We had named our shop Bachchuram Hiralal. Bachhuram is my great grandfather, while Hiralal is my grandfather. This is our main business firm. Later, we opened a clearance firm in the name of Bachuram Hiralal in Kolkata, India. We were in a joint family till then. After the death of my grand greatfather, my grandfathers split the family business and started their own. At that time, Nepal's trade was centred in Kolkata which was India’s financial capital. We started a clearance business while we were involved in wholesale trade of textiles.

How long did your textile business continue?
We continued the business until much later. At that time, my father was very close to the Royal Palace. During the coronation of King Mahendra, my father was in charge of all the work. He was allowed to use the government-owned Dakota aircraft to bring goods from Kolkata. On the occasion of Mahendra's coronation, my father sold all the cotton, linen or other cloth at the rate of one rupee per yard. Then in the year 1955, our joint family split.

After that, we began diversifying our business. But we had given continuity to the clothing business. My father enjoyed a good relationship with the Department of Agriculture.  He had built a good friendship with Hutaram Baidya, who was working as an engineer with the department. The friendship continued even after Baidya retired in 1959. On Baidya’s suggestion, we started ‘The Fertiliser Factory of Nepal’ near Birgunj Sugar Factory in Shreepur of Birgunj. It was Nepal’s first chemical fertiliser plant. We used to produce fertilisers needed for paddy and wheat crops. As I had already passed the SLC examination at that time, I was sent to Birgunj to oversee the factory works.

Birgunj Sugar Factory and Janakpur Cigarette Factory were established with Russian assistance. On the request of the general managers of these factories, we started producing fertilisers for sugarcane and tobacco crops as well with. Baidya’s technical assistance. As the railway track was near our plant, fertilisers used to be loaded onto wagons brought to our factory yard and transported to Janakpur via Raxaul and Jaingar. Once I went to deliver the goods myself. But due to heavy rains, the track of Jaynagar-Janakpur railway was submerged under rainwater. Then I went to the villages around Jayanagar and collected all the oxen carts and delivered the goods to Janakpur.

Why was the fertiliser plant nationalised later?
We were able to operate the factory for only two years. My father was a staunch Nepali Congress follower. All the lawmakers had come to attend my uncle's wedding procession after the parliament meeting. That is why the partyless Panchayat system formed after the political change of 1960 was against us. The government arrested my father from Ganeshman Singh's house on the same day BP Koirala was arrested from the stadium. He was kept in Bhadragol Jail for eight years. Then the government brought the concept of doing the fertiliser business by itself. It established the Agricultural Inputs Corporation in a room on the Dairy Development Corporation premises in Lainchaur. Surya Bahadur Thapa was the Prime Minister at that time. The government asked us to supply fertilisers to the Agriculture Inputs Corporation.  It was impossible to say no to the government. This way we started supplying fertilisers to the corporation and it started distributing it to farmers. Two years later, the government nationalised the factory without giving us any compensation. Birgunj’s governor Ram Narayan Shrestha himself had come to the factory with the letter. I received the letter myself. The government’s intention was to turn us bankrupt. But Madhav Prasad Ghimire, a retired government secretary, who was a lawyer, argued that ‘the government nationalised the work, not the asset’. Thus we got our assets back. We had also installed weighing bridges near the Nepal-India border in Birgunj and Hetauda. They too were nationalised by the government after just one and half months. The letter for it was also brought by Ram Narayan Shrestha.

Did the government intervene in your other businesses?
Later we established a firm named Nepal Diplomatic Suppliers. We started importing and supplying goods for diplomatic missions through this firm. The government didn’t nationalise the business like our other businesses, but it formed the National Trading Corporation and started importing and supplying goods to diplomatic missions. We then sold all the stock we had to the corporation.

You are also the first from the private sector to set up a plant in Balaju Industrial District. Please tell us more about it.
After the establishment of the Balaju Industrial District, we started a soap factory by building a simple structure using zinc sheets. At that time, the government used to allow import of oil from India under the quota system only. The factory would run as long as oil was coming from India. After the quota system was scrapped, we shut down the factory.

Your family business faced the wrath of the Panchayat system. When did your business revive?
We suffered a lot after being victimised by the state.  Obviously, it made a lot of impact on business. After that, I came to the conclusion that it is not possible to work in this country and went to Hong Kong with the official permission to do business from the British Embassy. Though the capital was provided by the family, I did all the work on my own. I established my own company in Hong Kong. At that time, there was a parcel system for imports according to which no licence was required for imports worth up to Rs 1,000. Even Rs 1,000 was a lot in those days. Goods could be sold in the market after paying applicable customs duty. Businesspeople in Kathmandu would place orders specifying the name of goods, and I used to send parcels from Hong Kong by plane. But I didn’t continue the business for long, because I feared it would invite criticism sooner or later. After staying in Hong Kong for three-four years, I returned to Nepal in around 1972.

Then I started two hotels in our house in Makhan, Hotel Konti and Hotel KT. The ownership of Konti Hotel went to my uncle after the split of our family business. Then in 1974, I started a firm named Interstate Transport. I added ‘Multimodal’ later in the name.

Transport business took up in a real sense after the Kulekhani Hydropower Project was established. How did it become possible?
Indeed. The government had already opened the Transport Corporation by 1980, but it didn’t have even a single motor vehicle. We started transporting rice paddy and other goods by signing a contract with the corporation. We were already a popular name in the market when the government started developing the Kulekhani project. We held talks with the Japanese construction company building the project and transported turbines and transmission equipment, among others. It was a very difficult task. We had to build roads and bridges at many places. A bridge near Suparitar in Hetauda was built by us. The bridge is still working.

We were involved in many projects after that. We transported goods and equipment for Marshyangdi and several other projects. Since there was a lack of a proper bridge in Simara, we had to bring goods for the Marshyangdi project via Bhairahawa. Our company also transported equipment for the Kali Gandaki project. Though the access road was not good, we somehow managed to transport turbines, substation and transmission equipment for the project.  

Later we were hired for a telecommunications project by a Japanese contractor. We transported several sensitive equipment. We had to work in 36 places at a time for this project. We transported goods by using helicopters and even mules.

How did the concept of dry port come to Nepal?
When the concept of dry port was first brought to Nepal, it was our company that convinced officials why such infrastructure is important for Nepal’s trade. I started working for the dry port concept from Raxaul. I got a lot of support from the Indian Railways. There were seven railway tracks in Raxaul. The Indian Railways built the eighth track near the land owned by Nepal Railways and allowed us to use it. Then I started bringing containers from Kolkata port to Raxaul with the support of Indian transport company CONCOR. Since Nepal didn’t have trains and trailers, I brought cranes from Mumbai to pick containers from the train and put them into trailers. The trailers would then haul the cargo until Birgunj. I had deployed around 40 trailers for the purpose. After the containers were unloaded, I used to send them to Kolkata.

I did this work for 10 months only. In these 10 months, everybody was convinced why the dry port was needed. Then the government built the dry port with the assistance of the World Bank. I continued work in collaboration with CONCOR. I enjoyed a very good working relationship with them. I facilitated the operation of CONCOR’s train in Nepal. The train was crucial for transporting World Food Programme’s aid to Nepal. Later, I established Himalayan Terminals in partnership with CONCOR.

Could you please elaborate what role did the establishment and operation of the dry port play in Nepal's foreign trade?
Certainly, the dry port has facilitated Nepal’s foreign trade.  After the opening of the dry port, goods can be directly delivered to Nepal instead of up to Kolkata port only. Foreign trade has expanded a lot. Today, we don’t have to depend on Kolkata port only. India has allowed us to use more ports, including the Visakhapatnam port. Containers from India come to our dry por without any hassles or obstacles. These developments have expanded our foreign trade. Clearing and forwarding activities do not take much time.

It shows that you were busy building multimodal transport infrastructure and policies for them throughout your entrepreneurial journey. What are your future plans?
I am getting close to retiring. I will turn 80 next year. But I have imparted all the knowledge about multi modal to our next generation. I even sent them to Belgium to learn multimodal transport. They have already become experts on the issue. I am like an adviser these days. The only thing I do is make new plans and share my concepts with the new generation.

Based on your experience, how feasible is it for Nepal to operate ships in Indian waterways?
Operating a Nepali ship in the Indian waters will not be easy. I don't see it as technically feasible. And it is not possible even after 10 years because it is not possible until dredging is done in rivers. The other thing is, it should be viable. There has to be a lot of cargo movement. I don’t see that happening. India has built riverports at Kalughat and Sahebganj in Bihar. Currently, only barges can operate in these ports. But now India has started deepening the river to develop inland waterways. If this happens, vessels of a certain capacity can operate. But it will be costly. I have not seen the feasibility. If that happens, goods will come to these riverports only. I don’t think India will allow Nepal to operate Nepali vessels on its rivers easily. India also has its own interests.

What is your experience about India's many non-tariff disruptions in trade with Nepal?
There are a lot of differences in the way we are treated at Kolkata and Visakhapatnam ports. We still face a lot of hassles in Kolkata, while things are a lot easier at Visakhapatnam. This happened because the supervisor of Visakhapatnam heard our grievances before we started using that port. It is because of this reason that most of our shipments are coming from Visakhapatnam today. Asian Development Bank (ADB) also played a big role in this. This became possible because ADB has facilitated implementation of the Electronic Cargo Tracking System (ECTS).

What is the position of Nepal in international trade today? How do you think it needs to move forward in the future?
First of all, the government has to be stable. It is taking us 25 years for work that can be done in five years. The work to be done in the next five years should be in a planned manner. For the trade and economy to flourish, we need stable policies. But we don’t even have stable governments. We still don’t have a national policy. Nobody is saying we need this policy for this sector.  

Nepal's international trade has its own challenges. Many reform works are needed to make Nepal's international trade simple and easier. Sometimes they say a dry port will be built in the west, and sometimes they say the dry port is needed in the north. There is only talk but no work. Take an example of Tatopani customs. Only four or eight containers come to its dry port in a day. How can our international trade flourish when such things persist? We need to take up the matter with China. China already has dry ports in Lhasa and Shigatse. Why are we not taking any benefits from these ports?

The government has built a dry port in Chobhar. How can it be operated effectively?
The Chobhar dry port holds potential. But to realise the potential, trains have to come here from Raxaul or Birgunj. There should be a government committee to operate trains between Birgunj and Kathmandu. In fact, if the train runs, there will be no place to store the goods here. That is because a majority of containers coming to Birgunj are meant for Kathmandu.

The dry port has handled around 18 containers only since it came into operation. The situation will remain the same unless there is train connectivity.This dry port is likely to be a white elephant for some years. I approached the government to take the warehouse of the Chobhar dry port on rent. But they don’t have any concrete plan. At least we can get some benefits from Chobhar dry port if its warehouses are managed effectively.

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