China Debt Trap: Nepal Airlines Corporation Reels Under Rs 50 Billion Chinese Debt

Kathmandu, April 20: Even after over six decades of its establishment, Nepal Airlines Corporation, the government flag carrier, continues to be in the grip of a debt crisis. The corporation, which is in debt of nearly 50 billion, and the prevailing situation could be attributed majorly to Chinese aircraft, according to a local media group.

As per a plan to profit the corporation, the Chinese aircraft were purchased about eight years ago. Four Y12 and two MA-60 planes were purchased with a soft loan and subsidy with a bilateral agreement between the Nepalese and Chinese governments. The contract for the purchase of Chinese planes was made in 2070 BS, according to which the MA-60 and Y-12 planes were to be taken under subsidy and the MA-60 and three Y-12 planes were under a loan, according to a report published in Pardafas. Chinese Debt Trap: Pakistan Owes 30% of Its Foreign Debt to China, Says IMF.

A sum of nearly 7 billion rupees was spent on the purchase of six Chinese planes, which burdened the corporation financially. Within three years, these planes, which were imported with the intention of helping the inhabitants of the hilly and Himalayan regions, were no longer helpful. The company had to bear daily losses from the planes. The corporation's data show that since 2071 BS, operating these aircraft has resulted in an average annual loss of 38 million rupees, as per Pardafas. China To Push Hard on Its Bargain on Debt Matters With Pakistan.

The corporation also purchased the Chinese aircraft to replace the Twin Outer DHC 6 model aircraft that had been in domestic service for the previous 40 years. The purchase of Chinese ships was directed by the Ministry of Tourism. Baburam Bhattarai was head of the administration at the time, Barshaman Pun served as finance minister and Lokendra Bista Magar was the tourism minister.

Those ships were purchased from Avic International, a Chinese government investment. It was discovered after some time that the MA 60 planes had a low load capacity. Similarly, ever since the ship started having technical issues, the financial strain on the company has been growing.

The company has begun preparations to sell planes that are now grounded. Two American Avian Asset Management Corporation employees arrived in Kathmandu a month ago to assess the sale of Chinese aircraft that have been grounded for three years. According to the firm, the company will analyse the planes in a month. In Nepalgunj, one of the six ships, Y12, suffered an accident.

Due to a lack of pilots, a lack of maintenance and spare parts, high fuel consumption, and non-profitability, the company is set to remove the aircraft, as per a report published in Pardafas.

According to sources, the government is getting ready to repurchase Chinese aircraft. Three planes will be purchased by the company for use in far-flung locations. According to a statement made by the corporation on Monday, a seven-person subcommittee has been established. Sudhir Samsher Rai, a member of the corporation's board of directors, would serve as its chairman. The company has also declared that it will use its own funds to buy aeroplanes for domestic operations.

Similarly, it was stated in the 60th annual report of the financial year 2078/079 published by the office of the auditor general that the corporation's interest amount has increased to 14.15 billion rupees as a result of the corporation's failure to pay the interest on the 12 billion loans it took from the employees provident fund for the purpose of purchasing widebody aircraft, reported Pardafas.

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