The Indian contractor building a cross-border railway has threatened to pull out of the project because land compensation disputes remain unresolved, preventing work from being done, officials said.

The broad-gauge railway being built in south-eastern Nepal will extend 18.6 km and link Katahari, Morang with Bathnaha, India. The IRs3.8 billion project is funded by the Indian government.

The scheme got bogged down in land compensation issues, and the builder Indian Railway Construction Company (IRCON) has told the authorities it will leave if the problems are not sorted out within two months.

The Nepal government has acquired 119 bighas for IRCON subsidiary IRCON International to lay the track. The project is part of the Indian plan to build electric broad-gauge lines connecting five major industrial areas in Nepal to its rail network.

Passenger and freight trains will run on the railway. Freight trains will bring raw materials to the factories and transport their finished goods to market.

The Indian portion of the railway track which is 5 km long was completed three years ago. Work on the 13.6-km section in Nepal has stopped for months following disagreements over land compensation.

Jiban Ghimire, Province 1 lawmaker and former minister for social development, on Tuesday drew the attention of the Provincial Assembly to the stalled project. Ghimire has requested the assembly members to take the issue seriously.

The railway line was originally slated to be completed in October 2016. Construction work on the Indian side was completed on schedule. On the Nepal side, work came to a standstill because of disagreements with landowners over compensation.

Aman Chitrakar, spokesperson for the Department of Railways, said IRCON had raised concern over the delay. He added that the local administration should mobilise security to resume work.

According to Deepak Kumar Bhattarai, director general of the department, the compensation disputes are related to a 2-km stretch of the Biratnagar-Bathnaha railway line.

"The landowners have petitioned the Supreme Court demanding fair compensation. They say the compensation offered by the government is too little,” he said. “The case is sub judice. We cannot comment on it," Bhattarai said.

Kashiraj Dahal, chief district officer of Morang, said initially there were compensation disputes at several stretches of the railway track alignment.

“Some disputes have been settled following the Supreme Court’s order to provide fair compensation. There are still disagreements on some stretches. Work cannot be resumed by mobilising the police because the case is sub judice. We cannot impose force. We have to wait for the court’s verdict," he said.

Officials say they are not sure about the verdict coming any time soon.

Dissatisfied with the amount fixed by the Compensation Determination Committee of the government, 22 landowners have filed cases at the Supreme Court.

Bishwanath Majhi, secretary of the Land Acquisition Struggle Committee, an ad-hoc committee formed to exert pressure on the government, said they had been forced to knock on the court’s door because the government did not heed the landowners' demands.

Initially, the Land Evaluation Committee of the government had fixed the valuation rate of seven types of land in the southern part of Biratnagar-Rangeli road.

But in the northern part, the valuation was made for only four types of land, which prompted landowners to launch a protest.

There were no disputes when the railway yard and station in Katahari Municipality-1, which lies 2 km north of the Biratnagar-Rangeli road, was being built.

“We have been hit hard," Majhi, a farmer, said. “As we were not satisfied with the land valuation, we decided to launch a protest.”

Initially, the evaluation committee had fixed the compensation at Rs200,000 per kattha.

Majhi said that when the project started, only three farmers had filed cases at the Supreme Court over the compensation offered by the government.

The court then ordered the government to pay Rs800,000 per kattha. But the government was unwilling to pay the same amount of compensation to other landowners.

“We were forced to knock on the court’s door to get equal compensation,” said Majhi.

He said that land values had increased sharply, reaching Rs2 million per kattha in the area. "We are offering our land to the government. If we don’t get fair compensation, we have to go to court," he said.

“We are not against development. If the government provides appropriate compensation, we are ready to withdraw the case,” Majhi said.

The government had acquired 119 bighas from 565 people in Katahari, Budhanagar and Jatuwa, Biratnagar for the construction of the broad gauge railway line, and distributed compensation with a minimum valuation of Rs90,000 to Rs2.5 million per kattha.

The Indian government had revised the target of completing the project by 2018. The Indian side had been repeatedly requesting the government to resolve the issue.

As per the agreement between Nepal and India, Nepal will resolve the issues related to land and the Indian government will construct the infrastructure.

Last year, the compensation issue had forced the Indian company to stop construction work on the railway line up to Biratnagar-18, Lawaghat.

The project subsequently moved ahead and finished laying sleepers on the track ballast in October.

Bhattarai said that the remaining work from Lawaghat to Rangeli road—laying sleepers on the track ballast—was in the final stages.

Nine months ago, the Indian government had awarded a contract worth Rs450 million to IRCON International for the construction of a railway in the northern part of Rangeli road.

There will be one station in Bhediyari, India and one each in Budhanagar and Katahari on the 18.61 km line. According to the project, only the Katahari station remains to be built.

On October 22, 2021, acting on behalf of the government of India, IRCON International handed over the 34.9-km section from Jayanagar to Kurtha to Nepal.