Nepal | July 10, 2020

Govt extends credit to build Pokhara airport

Himalayan News Service
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A traffic police gestures during a dummy preparation of the travel route of the distinguished guests from Pokhara Airport to Pokhara Grand Hotel, the venue of the 37th Session of the South Asian Association Regional Cooperation (SAARC) Council of Ministers

File – A traffic police gestures during a dummy preparation of the travel route of the distinguished guests from Pokhara Airport to Pokhara Grand Hotel, the venue of the 37th Session of the South Asian Association Regional Cooperation (SAARC) Council of Ministers, exercised on Sunday, March 13, 2016. Photo: Rishi Ram Baral/ THT

Kathmandu, June 6

The Ministry of Finance (MoF) has formally agreed to provide a 20-year loan of around Rs 22.20 billion to the Civil Aviation Authority of Nepal (CAAN), with a grace period of seven years, to build a regional international airport in the western city of Pokhara.

An agreement to this extent was signed yesterday between the two bodies.

As per the agreement, the CAAN has to start repaying the credit — extended at annual interest of five per cent — after seven years of obtaining the loan. The agreement also says the loan amount has to be paid in instalments of six months once the seven-year grace period is over.

This means the CAAN will have to pay around Rs 853.9 million in principal to the MoF every six months from the eighth year of acquiring the credit.

“With the extension of the credit, we hope the construction of the airport will be complete in the next four years,” Krishna Prasad Devkota, head of the Economic Policy Analysis Division at the MoF told The Himalayan Times.

MoF had extended the credit to CAAN from the soft loan provided by the Chinese government to Nepal.

During Prime Minister KP Sharma Oli’s official visit to Beijing in March, the Chinese government had agreed to provide 1.37 billion renminbi (approximately Rs 22.20 billion) in soft loan to the government of Nepal to build the regional international airport.

Of the total credit amount, RMB 1.02 billion is being extended by Export-Import (EXIM) Bank of China at an annual interest rate of two per cent. The remaining portion of the loan, or RMB 355.9 million, is being provided by the Chinese government without charging any interest.

Nepal needs around $216 million (approximately 1.54 billion yuan) to build the new airport at Chinnedanda, located at a distance of around three km from the existing airport in Pokhara, which currently can only handle small aircraft. Once the new airport is built, it will have a runway of around 2,500 metres long and 45 metres wide, and can handle big aircraft, such as Boeing 757s and Airbus 320s.

“We are planning to begin initial construction works, such as levelling of the ground where the runway will be built, soon after the monsoon is over,” the CAAN official said. “By that time we also expect to approve the design of the airport.”

The design of the airport has already been prepared by the China CAMC Engineering, the developer of the regional international airport selected by the government through competitive bidding in May 2014.

The airport is being built under engineering, procurement and construction model. Under this model, the developer will have to bear the expenses in the case of cost overrun.

The government has already acquired 3,106 ropanis of land to build the new airport.


A version of this article appears in print on May 07, 2016 of The Himalayan Times.

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