The biggest dilemma for planners in landlocked Nepal has always been dealing with the burden of geography: how to get goods to a sea port cheaply and reliably.

Transit through India in trucks has made trade expensive, and the goods are exposed to pilferage, damage and delays. Hopefully, last week's bilateral railway agreement between Nepal and India will address many of these problems.

The agreement allows an Indian company to operate a railway service between the container port in Birganj and Indian cities. India's public sector Container Corporation of India has already been selected as the operator and it will have 60 percent of the shares, while the rest will be owned by a conglomerate of Nepali companies.

In two months, when trains start shuttling between India and Nepal, our exports will reach ports in Calcutta within 24 hours-a journey that presently takes container trucks up to two weeks. Officials say trains will also bring transport costs down by 40 percent.

"The idea is to save time and money," says Surendra Govinda Joshi, senior transport specialist at the World Bank that financed 80 percent of the $16 million cost of the Birganj container port. "If all goes well, there will be two trains daily carrying Nepali products to Indian ports."

Container Corporation of India was the only bidder in a re-tender this year. It was one of two bidders in an earlier tender, but a private Calcutta-based company was disqualified. Officials at the Ministry of Commerce and Industry say that the Birganj dry port will be far more efficient than those in Bhairawa and Biratnagar. "That is because those two ports have road connections while the one in Birganj has railway facility. Naturally trains will reach the cargo for shipment faster," said an official.

The dry ports in Biratnagar and Bhairawa were also supported by the World Bank, and cost Rs 500 million each. Private operators who have leased these two dry ports have been paying the government Rs 10 million annually.

The Nepal-India joint venture operator will pay Rs 95 million per year to the government to lease the Birganj container port, which was completed three years ago but couldn't be commissioned because Nepal and India couldn't reach a railway agreement. Nepal was losing about $7 million a year while the port remained closed.

While officials are quite positive about the impact the railway service could bring to Nepal's export business, the private sector is keeping its fingers crossed. Businessmen say they will have to wait and see how the Birganj port functions and whether they will have the same trouble they faced in the past with the transit of Nepali goods through India.

"Let's wait and see," says Federation of Nepali Chamber of Commerce and Industry (FNCCI) first vice president, Chandi Dhakal. "We are eager to see if this facility can overcome the unnecessary delays we have faced while transporting our goods through transit before."

The FNCCI says despite bilateral trade agreements between Kathmandu and New Delhi, different rules in various Indian states add complications. "For instance, the Indians levy luxury tax on goods that should have free transit access," they say. "Whether the same story repeat even after the railway service comes into operation remains to be seen."

Another concern traders have is about the reliability and timing of the railway service. "If the railway service operator refuses to wait even for a short duration to accommodate delays at this end, it could cause troubles," says Dhakal.