Committee recommends asset sale to rescue Nepal Airlines Corporation

Qatar Airways proposes management takeover of Nepal Airlines Corporation amid financial crisis

KATHMANDU: A committee tasked with studying the financial woes of Nepal Airlines Corporation has recommended selling the corporation’s share ownership in Solti Hotel, valued at 4.57 billion, to help alleviate the airline’s crippling debt of 48 billion.

The committee, known as the ‘Structural and Managerial Study and Recommendation Committee of Nepal Airlines Corporation,’ was established in Chait 079 and led by former Governor Dipendra Bahadur Chhetri. Its primary goal was to suggest strategies for mobilizing resources for the struggling corporation.

The committee’s recommendations extend to urging the government to address the financial difficulties faced by various corporations, including those unable to repay loans from financial institutions like the Employees’ Provident Fund and Citizens’ Investment Fund.

One key aspect of their proposal involves selling the corporation’s substantial ownership of 13,336,699 shares in Solti Hotel Limited, as the share value has reached 4.57 billion. The proceeds from this sale could potentially be used to acquire new aircraft, according to the committee.

Former Governor Chhetri emphasized that this marks the ninth high-level committee formed to explore management reforms for Nepal Airlines Corporation. The committee underscored the urgent need to expand business operations to reduce the corporation’s mounting debt, which continues to increase due to poor managerial leadership. The committee recommended immediate efforts to secure subsidized loans as a means of financial relief.

Addressing the need for improved communication by political leadership, the committee pointed out that political parties have historically amended the Corporations Act in their favor. This has included abolishing the provision that designates the tourism secretary as the ex-officio chairman, instead opting to appoint the chairman from the Council of Ministers.

The committee proposed that the chief executive should be appointed with the secretary retaining the ex-officio chairman role. Chhetri emphasized the importance of appointing the chief executive through an open competition to ensure progress within the corporation.

Furthermore, the committee called for a revamp of the corporation’s structure, advocating for separate entities for international and domestic flights. It proposed transforming the corporation into a holding company and establishing subsidiary companies for international and domestic flights, with a greater shareholding by the government and related organizations.

The committee also recommended the addition of departments focused on ‘Research and Innovation’ and ‘Information Technology’ to modernize the corporation. To enhance governance, it suggested the creation of an audit committee operating directly under the board of directors.

Additionally, the committee proposed transforming the controversial commercial department into a marketing department. The report stressed the corporation’s dire need for increased capital, loans, and additional aircraft, aligning it with international standards.

Nepal Airlines Corporation, founded in 2015 to provide reliable and affordable air services, faces a significant debt burden that has accumulated over the years.

Various committees, both internal and external, have been established to address its financial challenges. The most recent committee, formed by Tourism Minister Sudan Kirati and led by former governor Chhetri, was tasked with studying various aspects of management and institutional reform.

Fiscal Nepal |
Monday October 2, 2023, 03:52:45 PM |

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