Under the Bangladesh-Bhutan-India-Nepal (BBIN) sub-regional connectivity framework, both Bangladesh and India will be able to generate a good amount of revenues by charging transit fees. Â
Bangladesh's earning may come to $204 million in 2020 while India's to $0.79 million in the same period provided a double-digit growth on cargo movement between the regional countries continued.
Such calculations may prove to be an answer to musings over the issue of levying transit fees when it was raised by various quarters in Bangladesh in respect of the transit facility granted to India.               Â
The calculations on transit fees are presented in a study titled 'Regional Transit Agreement in South Asia: An Empirical Investigation.'
Conducted by Dr Prabir De and Arvind Kumar, the study was published last year by Kathmandu-based South Asia Watch on Trade, Economics and Environment (SAWTEE) as a discussion paper.
The study portrays three transit scenarios to calculate fees and other charges on two broader transit arrangements. These are: India-to-India transit through Bangladesh and Nepal-to- Bangladesh transit crossing over India. Â The study assumes minimum $10 transit fee to be charged by Bangladesh for per container of one-thousand TEUs transit cargo and minimum $5.0 transit fee to be charged by India.
The first scenario is the opening of transit that leads to cargo movement between India's North-East Region (NER) and the mainland or rest of India through Bangladesh.
Here one assumption is such rail cargo movement will grow by 12 to 15 per cent annually between 2015 and 2020. In that case, Bangladesh may earn $27 million in total as transit fee in 2015 by charging minimum transit fee and the earning may increase to $54.5 million in 2020.
Again, assuming road cargo growth of 14 to 16 per cent in six years, Bangladesh's earning may range between $97.3 million $204.3 million.
The study pointed out that currently NERs export and import were handled at Kolkata and Haldia ports and transportation of goods between NER and the rest of India takes place through a narrow Siliguri corridor called 'chicken's neck'.
These cargoes may go through Bangladesh if the country allowed India full-fledged transit. Thus transit cargo movement is estimated on the basis of current trend of movements through the 'chicken's neck'.
The second scenario is transit of rail cargo between Nepal and Bangladesh through India where Nepal will use Bangladeshi seaports in Chittagong and Mongla.
Here, India will earn $0.31 million in 2015, which will stand at $0.40 million in 2020, by charging minimum $5 per container.
Lower volume of cargo traffic is main reason for such low revenue generation.   Â
At the same time, Bangladesh may earn $0.61 million in 2015 and $0.79 in 2020 against freight charges in the ports.
And from container-handling charges -- minimum $75 per container -- the earning may range $4.58 million to $5.96 million in the next six years.
In the third scenario, India's northeast is likely to use Chittagong Port of Bangladesh to load/unload its export-import cargoes.
Here, Bangladesh may earn $0.45 million and $0.48 million by charging $5.0 minimum transit fee in six years.
Moreover, Bangladesh -- considered heartland for regional transit -- can earn additional revenue from container handling in the seaport. The amount may range between $6.68 million and $7.27 million.
These estimations on revenue earnings by charging transit fees, however, appeared very ambitious due to assumption of huge cargo movements between mainland India and NER through Bangladesh.
In Bangladesh, the core committee on transit in 2011 estimated that volume of transit cargoes would be around 174 million tonnes with an annual growth rate of 2.0 per cent.
When contacted through e-mail, Dr Prabir De, one of the researchers, told the FE that transit fees might vary depending on modes of transport, routes and goods carried.
"The caveat in that transit will lead to higher revenues but also generate costs," said Dr De, who is a professor at the Research and Information System for Developing Countries (RIS) in New Delhi.
"In our paper, we didn't factor in external economies such as pollution, damage of road, accidents, etc. Our model is a static model. One has to run a dynamic model before taking a decision on the future of transit," he added.
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