The Korala border crossing in Mustang has seen a sharp rise in cargo traffic after floods on August 26 closed Nepal’s two main trading points with China, Rasuwagadhi and Tatopani, diverting freight to the northern Mustang route.

The customs office at Nechung in Lomanthang Rural Municipality is located 13 kilometres from the Korala border point. Before August 26, the office cleared five to six cargo containers a day under normal conditions and eight to 10 during festivals.

By August 26 of the current fiscal year, the customs office had cleared 163 electric vehicles and 133 cargo containers through Korala. Since then, the number of containers being cleared has risen to around 50 a day.

The containers are carrying ready-made and fashion goods, beauty products, apples, garlic and industrial raw materials for the festival and winter seasons.

“Containers that used to come through Rasuwagadhi and Tatopani have been diverted here,” said Bidur Chudal, chief customs officer at the Mustang Customs Office. “The pressure has also increased because containers are being diverted from Shigatse and Lhasa.”

Despite major customs infrastructure on the Chinese side, Nepal is still operating the crossing with temporary facilities. The Customs Department has sent six additional employees to the office, which previously had 12 staff members, easing some of the shortage.

However, electricity and internet connectivity have become major problems as the office struggles to handle the increased workload.

Power supplied through the national transmission line is frequently interrupted, while Nepal Telecom’s fibre-optic internet connection from Mustang is also frequently disrupted and slow.

“From the time traders submit details of their goods to the work we do, everything is handled through a computer system,” Chudal said. “Frequent power cuts and slow internet have made it difficult to manage the increased workload. Traders are also facing problems.”

He said the office had asked Nepal Telecom to increase the capacity of the internet connection.

A building for plant quarantine was constructed after the Korala crossing began operating on September 16 last year. Since agricultural and forest products were not being imported or exported through the crossing, the building had been used as a police office.

After the August 26 floods, the Plant Quarantine and Pesticide Management Centre deployed a three-member team to Mustang under senior crop protection officer Prakash Paudel. As the quarantine building is occupied by police, the team is currently working from a tent.

An Armed Police Force border outpost and a Nepal Police team are also stationed at Nechung.

The increase in cargo traffic has also sharply increased customs revenue.

The customs office collected Rs520 million up to August 26 of the current fiscal year. From August 27 to September 10, however, it collected Rs1.5 billion.

“Despite the lack of infrastructure and various other problems, we collected Rs1 billion in revenue in 15 days,” Chudal said.

He said the customs office had also operated during winter in previous years and would be able to continue regular operations as long as the area did not experience prolonged heavy snowfall.

Mustang Chief District Officer Ajita Sharma said authorities were coordinating efforts to address infrastructure problems, including offices, staff accommodation and quarantine facilities at Nechung.

“The existing infrastructure was sufficient when there was less pressure,” she said. “The pressure has now increased. We are working to resolve the electricity and internet problems as quickly as possible.”

Transport costs rise 15-fold

Rasuwagadhi is 110 kilometres from Kathmandu, while Tatopani in Sindhupalchok is 115 kilometres away. Korala, by contrast, is 415 kilometres from Kathmandu and takes two days to reach one way.

The 100-kilometre road between Kagbeni and Korala in Mustang is entirely unpaved. Parts of the road in Myagdi are also unpaved and prone to landslides.

When containers are diverted from Kerung to Korala, they have to travel 450 kilometres on the Chinese side.

According to Prahlad Thapa, vice-president of the Nepal Truck Container Entrepreneurs Association, the cost of transporting a container from Rasuwagadhi to Kathmandu had been Rs50,000.

The cost of bringing goods through Korala has now risen to Rs750,000 per container.

“It costs Rs100,000 to pay the driver to take a container from Kerung to Korala and Rs250,000 for the container,” Thapa said. “The container charge for travelling from Kathmandu to Korala and bringing goods back is Rs400,000. So the transportation cost has increased 15-fold compared with using Rasuwagadhi or Tatopani.”

He said the higher transport costs would directly affect traders and consumers.

The Bhotekoshi floods swept away around 350 containers along with workers, while another 100 containers are stranded in Kalika of Nuwakot, making it difficult to find containers and drivers.

Thapa said poor roads, high accommodation and food costs in Mustang, a shortage of workers, the fact that a container can make only three trips a month between Korala and Kathmandu, and extremely cold weather that can cause engine problems were among the other factors driving up transport costs.

“Consumers are likely to suffer during Dashain and Tihar,” he said. “Tatopani was functioning relatively well after Rasuwagadhi was washed away. The government needs to make efforts to reopen Tatopani.”

Korala expanded as alternative crossing

Before the Covid-19 pandemic, China used to organise cross-border trade fairs in June and September for residents of Lomanthang and Lo-Ghekar Damodar Kunda rural municipalities in Upper Mustang.

Residents of the border areas of Nepal and China would travel through Korala to Zhongwasen in Tibet to buy and sell daily necessities. China unilaterally closed the border after the Covid-19 pandemic.

Following then-prime minister Pushpa Kamal Dahal’s visit to China, the crossing was opened year-round for residents of the two rural municipalities in Upper Mustang from November 13, 2023. Later, residents of Lower Mustang were also allowed to cross with entry passes.

Although the crossing was open to Mustang residents, import and export activity remained negligible.

As landslides and floods repeatedly affected the Rasuwagadhi and Tatopani crossings, the Mustang Customs Office increased its staffing and infrastructure, and the Korala crossing was brought into full operation from August 16 last year.

The customs office collected Rs6.92 billion in revenue in the last fiscal year 2082/83. Imports through the crossing were worth Rs14.4 billion, while exports from Nepal were valued at Rs205 million.

During the last fiscal year, the customs office cleared 3,223 electric vehicles and 1,873 cargo containers through Korala.

The Mustang Customs Office has set a revenue target of Rs9 billion for the current fiscal year. Chudal said the closure of Rasuwagadhi and Tatopani meant revenue collection was now likely to exceed the target.