Chinese aircraft purchase plan: NAC financial documents forwarded to Finance Ministry
KATHMANDU, DEC 16 -
The Tourism Ministry has forwarded the financial documents presented by the Nepal Airlines Corporation (NAC) to the Finance Ministry to proceed with a loan agreement with China’s EXIM Bank for the purchase of four Chinese aircraft.
The government plans to borrow loans from the EXIM Bank to buy the aircraft to NAC to expand its domestic fleet. China has pledged to provide a 19-seater Harbin Y-12e and a 58-seater MA60 turboprop in grant and four other aircraft—three Harbin Y-12e and an MA60—on soft loans.
“We (the Tourism Ministry) have sent all the documents three days ago as asked by the Finance Ministry,” said Ranjan Krishna Aryal, joint-secretary at the Tourism Ministry.
According to Aryal, the bank has asked for NAC’s financial report to fund the project. “After studying the report, the bank will sanction the loan,” he said, adding the Finance Ministry and the bank will then proceed with the loan agreement.
Government officials said the interest rate on the loan is expected to be less than 1.75 percent. According to top NAC officials, the entire process of procuring the aircraft is expected to be finalised within a month.
Officials said China has responded positively to provide a five-year grace period for the loan and interest repayment. The provision will enable NAC to enjoy earnings for at least five years.
On Nov 29, NAC signed a commercial agreement with AVIC International Holdings, a Chinese government undertaking, to procure the aircraft. If things go as planned, NAC will receive the first delivery of two aircraft in grant within two months after the loan agreement. Rest of the deliveries are expected five months after the first delivery.
On August 7, 2011, NAC had written to the Finance Ministry, requesting it to purchase eight aircraft in foreign grant. And in November 2011, the ministry requested China to provide aircraft either in grant or on concessional loans. The Chinese side responded positively, expressing their readiness to provide some aircraft in grant and some under soft loans.
An NAC technical team, following its inspection visit to China, reported the airplanes were fit for the Nepali skies. Subsequently in December 2011, the Chinese government formally informed the Finance Ministry that three aircraft would be provided to NAC in grant and the others on soft loans.
However, the process landed in controversy, with the Commission for Investigation of Abuse of Authority being called to probe alleged irregularities. The government again revived the plan on October 17, 2012, under its Immediate Governance and Economy Reform Action Plan 2012.
Source: The Kathmandu Post
