Core body identifies factors to determine transit benefits

The Core Committee on Transit has identified a number of factors --including internal and external costs of Bangladesh for building infrastructure -- that will act as the determining issues about assessment of the country's actual benefits accruing out of possible transit arrangements between Bangladesh-India-Nepal and Bhutan through fixing transit traffic and other fees.

The committee, headed by Bangladesh Tariff Commission (BTC) Chairman Mojibur Rahman, was asked by Prime Minister's Office (PMO) on April 18 to prepare a report on the country's prospective benefits under transit agreements with the three countries. It submitted its report to PMO last week.

The PMO also asked the committee members to examine whether existing inland waterways protocol and the memorandum of understanding on railway cooperation between Bangladesh and India could act as an alternative to transit agreement with India, a top official in the government said.

"Efficient charging implies that charges should be linked as closely as possible to costs. As infrastructure and congestion costs vary significantly across vehicle characteristics, both in time and in space, there have to be accurate differentiated efficient charging systems in many respects,' reads the report of Core Committee.

'Pricing is a method of resource allocation, there is no such thing as the 'right' price, rather there are optimal pricing strategies to permit specified aims to be achieved,' it added.

The committee has included seven major factors in determining the charges to be levied on transit traffic.

The factors are: how the implementation stages are designed, which the modes of transportation are, what the modes of financing -- loan or grant or government's budgetary allocation -- are, how they are to be paid, how the welfare effects would develop and accumulate during and after implementation period, what consideration about special and differential treatment will be given in the transition path and what type of global and local environment should be considered.

Earlier, the Committee, in its report, submitted to the government in mid-April said the country's infrastructure will need an aggregate investment of about Tk 500 billion (equivalent to $7.11 billion) for its facelift to cope up with the demand for additional traffic load under a transit regime with the three neighbouring countries.

The report, however, strongly suggested for providing full-fledged transit facilities to neighbouring India, Nepal and Bhutan, only after making the required improvements in the country's existing state of related infrastructures -- roads, railways, waterways and sea- and land-ports.

The policy-makers of the government including the Finance Minister and the Prime Minister's Economic Affairs Adviser, who attended the meeting during the presentation of that report, asked the Core Committee to assess the country's economic benefits, along with suggestions about transit traffic fees soon.

"We have outlined every aspects of fixing charges and fees in a transit regime through our latest report," a top official in the Bangladesh Tariff Commission said.

"In case of transit transport pricing, we need to take into account the internal and external costs as well as the opportunity cost of the operators," the report mentioned.

Elaborating, the report said infrastructure construction and maintenance (fixed and variable costs) and transport equipment construction and maintenance (fixed and variable costs) will be considered as internal costs.

Factors like congestion, accidents, emissions, noise pollution, visual intuition and eco-system fragmentation are to be considered as external costs, the report added.

After analyzing the existing inland waterways protocol and the memorandum of understanding on railway cooperation between Bangladesh and India, the Core Committee on Transit said no full-fledged and long-term transit facility could be given to any of the three countries under the agreement and the MoU concerned.

'However, given its (inland waterways protocol) limitations and inadequacies, we are of the view that it can continue for the time being until a comprehensive transit agreement is framed,' reads the report.

'To work out a rail transit, we will have to look at the railway scenario of Bangladesh afresh, taking note of the existing constraints, of which the most important are the unsuitable rail beds and technical restriction of the Bangabandhu Bridge to carry containerised rail cargo.'

News Source: 
The Financial Express