KATHMANDU, Nov 28: Public Accounts Committee (PAC) of Legislature-Parliament on Friday ruled that it smells rat over Nepal Airlines Corporation´s bid to buy two Airbus aircraft and ordered the national flag carrier to halt procurement process till its investigation is complete.
It also decided to probe deeper into the case, summoning NAC board of directors, Ministry of Finance (MoF) officials and Employees Provident Fund (EPF), from where the national flag carrier is eying to get loans of Rs 10 billion to buy one wide-body and another narrow-body aircraft.
Kansakar asks govt either to allow it to buy aircraft or shut the corporation
The committee also issued strong warnings to the NAC management for going against its previous ruling and making announcement of signing a procurement agreement soon, paying 2 percent of the purchase amount, with Airbus.
"NAC must first convince us that the money it is borrowing from EPF will remain secure and it is following law while undertaking the procurement," said PAC Chairman. Otherwise, he added, the already ailing NAC could drag even the EPF to insolvency.
Lawmakers in PAC raised questions over the intent of NAC for paying an advance of Rs 56 million to Airbus much before confirming the sources of fund for buying.
EPF, on which NAC has pinned hopes for fund, has sought government guarantee for issuing loans. And MoF has indicated that the chances of NAC getting guarantee is slim, given its inefficiency, resistance to reforms and vertically split management.
"What will happen to the advance money, if the government did not pledge guarantee for EPF loans?" questioned Hridayesh Tripathy, a lawmaker.
He also asked NAC management to furnish its reforms and business plan and also a bank payment voucher of advance it paid to Airbus.
However, NAC Executive Director Sugat Ratna Kansakar said he was hopeful of getting the government guarantee for loans.
"We have a sound business plan, which suggests we will be able to pay back all interest and principal amount in seven to eight years," he said.
Referring that NAC has not added new aircraft in its fleet for the last 22 years, Kansakar asked the government either to allow it to buy a narrow-body aircraft for regional business and a wide-body aircraft to tap European business, or shut down the corporation.
Lawmakers agreed that it was high time new aircraft are added to NAC fleet. "But that does not mean that NAC will be allowed to defy basic norms and laws of procurement," said Ramji Sharma, another lawmaker.
In his statement, NAC´s second in command KB Limbu, interestingly, said that NAC´s decision to buy a wide-body aircraft was not based on realistic business plan, but on heavily manipulated data.
"The business plan that Kansakar referred to portray rosy performance of EPF´s loans says that NAC will enjoy 88 percent of total European business and in some destinations its business will grow by more than 700 percent. These figures cannot be relied upon," said Limbu.
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I have heard before of irregularities within NAC and I believe it is quite logical to have some hue and cry. But at the same time we should not forget the long legacy of Nepal Airlines and its contribution in promoting tourism long before the Nepal’s sky was opened for private airlines. The airline would have been in profit if it did not have to fly into non profit sector as part of its social obligation and was not frequently subjected as a milking cow. Personally it has always been a symbol
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Birodh Pandey
i really appreciate Mr. Kansakar. either allow NAC to buy those aircrafts or just shut down the corporation. Why don´t they leave NAC to proceed on its plans? i think they want to be the second GP Koirala who damaged the succesing NAC about a decade ago. really, nepalese government is an idiot. the leaders of our country can´t think in a positive way. they should see the merits after buying those aircrafts rather than the demerits that they are looking before the arrival of the aircr
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