Fiscal Nepal
First Business News Portal in English from Nepal
KATHMANDU — The loan taken by the Nepal Airlines Corporation (NAC) to purchase its Airbus A320 and A330 aircraft has surged from Rs 36 billion to Rs 55.04 billion, according to the latest findings of the Office of the Auditor General.
The national flag carrier had borrowed Rs 36 billion under a government guarantee to finance aircraft purchases. The loans were secured on June 18, 2013 (Asar 4, 2070 BS) and June 11, 2017 (Jestha 28, 2074 BS) from the Employees Provident Fund (EPF) and the Citizen Investment Trust (CIT).
Of the total financing, Rs 22 billion was borrowed from the Employees Provident Fund, while Rs 12 billion came from the Citizen Investment Trust, backed by a sovereign guarantee from the government.
The Auditor General’s Office said the airline’s failure to make timely principal and interest payments caused the loan liability to increase substantially. As of the end of Asar 2082 BS, outstanding debt related to aircraft purchases had climbed to Rs 55.04 billion.
The report noted that the debt burden continued to increase over the past three years, with concerns raised over weak financial management and delayed repayment obligations.
According to the report, the Auditor General had previously been unable to conduct a full review of the aircraft loan because necessary financial details were not provided during the tenure of former Executive Chairman Yubaraj Adhikari.
Following his retirement, the corporation provided records, allowing the Auditor General to assess the status of the aircraft financing for the first time.
The report states that if Nepal Airlines had repaid the narrow-body aircraft loan on schedule, the debt would have already been fully cleared.
Similarly, for the wide-body aircraft loan, only around one-third of the repayment period should have remained, but instead, the principal liability has already increased by Rs 19 billion.
The report further warns that the airline’s liability is expected to increase by an additional Rs 4 billion during the current fiscal year, intensifying pressure on the financially strained state-owned carrier.
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