Rs 6.73b agreement with China next week
KATHMANDU, NOV 24 -
The Ministry of Finance is preparing to sign loan and grant agreements of RMB 408 million (Rs 6.73 billion) with China next week to procure six aircraft for Nepal Airlines Corporation (NAC).
According to ministry officials, China will provide a grant of RMB 180 million (Rs 2.98 billion) to procure a Y-12e and a MA60, while the China EXIM Bank will fund RMB 218 million (Rs 3.76 billion) in soft loans to buy three Harbin Y-12e and an MA60.
“Although, the Chinese side had requested for a speedy agreement signing process, it has been pushed for the next week due to necessary documentation,” said a ministry official. On November 14, the Cabinet had given its go-ahead for the deal.
During the negotiations held before the Cabinet’s nod, the Chinese side had agreed to reduce the aircraft ’s price by RMB 10 million to RMB 218 million, according to the Ministry of Culture, Tourism and Civil Aviation. “However, initial loan agreement will be of RMB 228 million,” the official said.
The officials said induction of new aircraft to the NAC fleet will enable the ailing national flag carrier to compete with private players, in terms of fare and market occupancy. China has pledged to deliver the first aircraft within two and half months after the signing of agreement. The officials said the aircraft manufacturer has already taken the livery and other designs of NAC.
NAC plans to operate the Y-12e in the remote sector. “Passengers will be benefited the most as there will be a fierce competition in terms of airfare,” the official said. Currently, NAC only has a single aircraft in its domestic fleet. It has been incurring huge operating losses due limited aircraft and its obligation to operate flights in rural areas. NAC’s domestic market share has declined to almost 2 percent. The number of annual domestic fliers stands at 1.58 million, according to official data.
As the Chinese side has accepted Nepal’s proposal to provide a seven-year grace period on the 20-year loan repayment deadline, it will help NAC to enjoy earnings for at least seven years.
Bids for Bhairahawa airport upgradation
The Civil Aviation Authority of Nepal has said preparations are in final stages to invite bids for the upgradation of Gautam Buddha Airport in Bhairahawa into a regional international airport.
After the Asian Development Bank (ADB) provided additional funding for the project, the project has moved forward. “The tender document prepared for the project has been sent to the bank for its final comments,” according to a CAAN official. “After its comment, we will invite the tenders.”
The first phase of construction of the three-year project was originally planned to start by the end of 2011. But the project hit a roadblock due to the lack of resources after a fresh study showed another $53 million would be required to complete it. Four years ago, an ADB survey had estimated the cost at around $36 million. The $99.5 million project includes the airport and infrastructure in Lumbini, of which the airport is estimated to cost $90.6 million.
The project will be financed under $42.96 million loans and $12.75 million grant from the ADB’s South Asia Tourism Infra-structure Develop-ment Project. The OPEC Fund for International Develop-ment, as ADB’s co-financing arm, will provide $15 million in loans, while the Nepal government will contribute $29.17 million.
Source: The Kathmandu Post
