The government spent Rs 3.69 billion over the past year on initiatives aimed at developing and expanding railway services, conducting related research, and exploring potential areas for future railway projects in Nepal. However, the substantial expenditure yielded little to no visible outcomes, raising concerns over the effective use of public funds.

The Ministry of Physical Infrastructure and Transport initiated dozens of plans and formed three powerful agencies under the railway expansion initiative. These agencies then opened six separate offices.

The 62nd annual report of the Office of the Auditor General states that in fiscal year 2023/24, the government allocated Rs 3.77 billion to the Department of Railways and its subordinate offices and spent Rs 3.69 billion. Every year, the government allocates billions for railway-related projects, yet it makes little to no progress.

According to the report of the Office of the Auditor General, the government set a target to upgrade and build 348 kilometers of railway tracks by fiscal year 2023/24 to connect industrial and commercial hubs and provincial administrative centers along the southern Terai border with the East-West and Kathmandu-Terai railway networks, including the East-West Railway and the Kathmandu-Pokhara line. However, by the end of Ashad 2081 (mid-July 2024), the government had made little to no progress.

The authorities managed to construct only 51 kilometers of railway along the Janakpur-Jaynagar section and just 10 kilometers on the Jogbani-Bathnaha-Biratnagar segment.

Similarly, they completed a feasibility study for a 77-kilometre metro rail network within the Kathmandu Valley. The government also aimed to operate cross-border railway services on routes such as Jalpaiguri-Kakarbhitta, Nautanwa-Bhairahawa, and Nepalgunj Road-Nepalgunj, but these projects also saw no progress.

The report urges the government to align its targets and programs with periodic development plans to achieve meaningful results.

Kamal Kumar Shah, the spokesperson and information officer at the Department of Railways, stated that the government spent the entire Rs 3 billion allocated for fiscal year 2080/81 (2023/24) on compensation and construction. Although the government spends billions annually on railway operations and development, only one train runs daily in Nepal—and it operates at a loss.

Nepal launched railway services on the Janakpur-Jaynagar route on April 3, 2022. To initiate operations, the government granted Rs 250 million to the railway company, which has since depended on government subsidies for maintenance and operations.

Nepal still hires drivers and technical staff from India to operate the train between Jayanagar in India and Janakpur in Nepal. The government spends over Rs 10 million each month to cover their salaries.

The government has yet to produce Nepali train drivers. It formed a Railway Board to develop and expand the railway system. The government introduced the Railway Board Act 2079 in 2079 BS to establish the board. Although it decided to dissolve the Nepal Railway Board three years ago, it has not dissolved the board because the board was formed under the Railway Board Act.

The government allocated Rs 6 million for the Railway Board in the current fiscal year. For now, the board operates from an office within the Railway Department's complex in Bishalnagar. According to the ministry, the railway company employs 110 staff members, and the department has 50 employees. Including the Railway Board, about 200 people work in the railway sector.

The government operates not only the Railway Board and the Railway Department but also the Nepal Railway Company for railway development and operations. The Railway Department established the Railway Project Directorate, which opened separate offices in Jhapa and Lalbandi. These project offices spend billions of rupees annually under the pretext of compensation.

A senior official at the Ministry of Physical Infrastructure said, "When constructing large-scale infrastructure like railways, authorities should conduct studies on operation, losses, achievements, outcomes, and impacts. However, they allocated the budget without such studies." The official added, "For example, in fiscal year 2020/21, the government awarded a Rs 6 billion contract for the Kakarbhitta-Inaruwa railway route but later cancelled it. The government had to cancel the contract because it awarded it without proper study and preparation."

He said no one has studied how much railway operations would reduce consumer goods prices, how much loss the operation would incur, or how those losses would still affect the region's economic activities.

A senior official from the Railway Department said we should not evaluate the expenses for developing and operating Nepal's railway in terms of profit and loss. He suggested viewing it as a long-term development for the country.

By Bhuwan Sharma