Nepal | August 21, 2019

House committees’ probes will give clear picture on NAC’s wide-body issue

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Sujan Dhungana

Nepal Airlines Corporation has been facing severe criticism from all quarters on its purchase of the two wide-body aircraft and its failure to operate them in a full-fledged manner. Following charges of anomalies while procuring those aircraft, parliamentary committees, including the Public Accounts Committee, have initiated a probe on the issue. Sujan Dhungana of The Himalayan Times caught up with Krishna Prasad Devkota, secretary at the Ministry of Culture, Tourism and Civil Aviation, to get more details on the issue. Excerpts:

The procurement process of the two wide-body aircraft by Nepal Airlines has been questioned by various quarters including different House panels. What is your take on this?

The procurement process of the wide-body aircraft had begun after the budget of fiscal year 2014-15 envisioned to add 22 aircraft to Nepal Airlines Corporation (NAC)’s fleet — 15 for domestic flights and seven for the international sector — within five years. Consequently, the fiscal budget in 2015-16 announced that the government would purchase two wide-body aircraft within 2017-18. Following this, the Ministry of Finance gave a nod to the procurement process and NAC acquired the necessary loan from Citizen Investment Trust (CIT) and Employees Provident Fund (EPF). That was how the process to purchase the wide-body aircraft started. It has to be noted though that Nepal does not have ample experience and expertise in purchasing wide-body aircraft. We had purchased narrow-body aircraft 28 years back and the same expertise and experience was used while purchasing new wide-body planes. NAC is guided by its own policies and there are several other laws guiding the purchase process of wide-body aircraft. The corporation has briefed me that all existing legal norms were followed while purchasing the wide-body aeroplanes. Another issue that has been raised was regarding purchasing planes of Airbus over Boeing. As NAC is a small firm and cannot handle planes of two companies, the government and the board of NAC decided to purchase aircraft from Airbus. When I joined the Ministry of Culture, Tourism and Civil Aviation, the wide-body procurement process had almost been completed and NAC had already released payment of Rs eight billion to purchase the planes. Questions were not raised when these aircraft were being procured and the entire process ran into controversy only after the aircraft arrived in the country. However, as the entire process has been questioned, I have urged parliamentary committees at various meetings to start a probe into the issue and recommend action against any malpractices. I will personally support House panels in every investigation.

Do you mean to say that MoCTCA is unable to conduct necessary probes?

It is not that MoCTCA is unable to conduct a probe. However, as NAC is a part of MoCTCA and our joint secretaries are its board members it will not be plausible for us to conduct an investigation. NAC has been saying that the procurement process of the wide-body aircraft is as per the law and its board, which has members from MoCTCA, had given a nod to the entire procurement process. Thus, any probe conducted by MoCTCA and its findings will not be considered credible. As the issue has been taken up by different parliamentary committees, their probes and findings will be considered more credible. House panels or any other constitutional body should drill into this issue and reach a conclusion. Probes carried out by any other agencies and its findings will be less credible especially against the backdrop of different issues being raised in the media about the wide-body case. I believe that the parliamentary probes will bring to light the facts behind the wide-body purchase issue. The parliamentary committees will either give a clean chit to NAC or recommend action against offenders if there have been any discrepancies in the purchase process. I believe that the procurement process has followed legal norms and NAC has not purchased the aircraft at an expensive rate, which has been claimed by many. I am optimistic that various questions that have been raised regarding the wide-body aircraft purchase will be answered soon as the parliament has started dealing with this issue.

Questions are also being raised on NAC’s ownership of the wide-body aircraft. What do you have to say on this?

I was also surprised when I read in the newspapers that NAC had brought the wide-body planes on lease. I immediately summoned the related NAC officials and they assured me that the aircraft were purchased and not brought on lease. They clarified that there are two distinct procedures when purchasing and when bringing the aircraft on lease. Even after the clarification from the concerned officials I made it a point to consult with Civil Aviation Authority of Nepal to get a clearer picture and I was informed the wide-body aircraft are fully owned by NAC. Moreover, CAAN showed me all documents related to the registration of the wide-body aircraft. Those aircraft were flown directly from the Airbus facility in France to Nepal and are fully owned by NAC.

Similarly, NAC is also being criticised for its failure to operate the wide-body aircraft in a full-fledged manner. Isn’t this due to lack of proper business plan with NAC?

It is true that our wide-body aircraft are yet to fly to various destinations as planned earlier. However, I expect these planes to start commercial flights to new destinations soon. I have been informed that these wide-body aircraft of Nepal Airlines will start flying to Japan from February and to China from March next year. Meanwhile, though it is the primary responsibility of NAC to seek market, the international market for NAC also depends upon the strength of Nepal’s diplomacy with other nations.

Nepal has so far signed Air Services Agreements with 39 countries with the last being signed with Cambodia about two weeks ago. However, this has failed to increase country’s connectivity accordingly as NAC today flies to only six nations. Why is this so?

This is true. The fact is we have not been able to transform public enterprises into business-driven entities and this applies to NAC as well. Failure to increase country’s air connectivity is a result of this. Government enterprises have failed primarily due to two reasons — failure of bureaucracy and political interference. We failed to increase connectivity with nations with whom we have signed ASA also due to lack of enough aircraft with NAC. The other reason is due to lack of seriousness among bureaucrats that has been hindering the growth of public enterprises.
Regarding NAC, we are planning to privatise the corporation in the near future. NAC’s growth and increase in international flight connectivity also depend upon effective diplomacy between Nepal and governments of different nations with whom we have signed ASA. In a nutshell, this is due to the failure of the state mechanism. In case of NAC, we are planning to bring in the private sector and the corporation will gradually expand its fleet and connectivity. It is also important that NAC operates properly to maintain credibility.

Lastly, Nepal is observing 2020 as ‘Visit Nepal Year’ and the operation of Gautam Buddha International Airport is expected to be crucial to ensure success of the campaign. How confident are you that GBIA will start operations by the designated time?

Both the government and private sector are working aggressively to make ‘Visit Nepal 2020’ a successful event. Regarding GBIA, we have set the target to hold test flight at the airport in September and start business flights from October. I believe we can make this happen.


A version of this article appears in print on December 11, 2018 of The Himalayan Times.


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