Kathmandu, May 11

Nepal Airlines Corporation (NAC) — national flag carrier — is all set to send first instalment of the payment to AAR Corp, the supplier of two wide-body aircraft.

As per the agreement with AAR Corp, NAC was supposed to send money by first week of May. However, payment has been delayed due to prolonged loan negotiation with Employees Provident Fund (EPF) and Citizen Investment Trust (CIT), as per NAC’s Managing Director, Sugat Ratna Kansakar.

NAC is going to send 35 per cent or around Rs eight billion out of the total cost of around Rs 22 billion to the supplier as the first instalment. According to Kansakar, NAC will obtain around Rs four billion from each government institution — EPF and CIT. He further informed that initial negotiations have begun and the airlines will likely be able to secure the loan at nine per cent interest with payback period of 15 years.

The Cabinet has already decided to extend government guarantee for NAC to obtain loan. The NAC board, chaired by secretary at Ministry of Culture, Tourism and Civil Aviation, had selected agent company AAR Corp as it had quoted lowest price to supply the aircraft. NAC, in its tender document, had sought second-hand aircraft that has been flown for only up to 1,000 hours, but AAR Corp had proposed to supply new aircraft at $104.8 million each.

NAC has already sent $1 million to AAR Corp as commitment fee for the aircraft. As per the agreement signed on Friday, NAC will pay for the aircraft in two instalments. The first tranche will be around Rs eight billion and next one is Rs 14 billion, according to NAC.

AAR Corp has offered to deliver first aircraft by September 2017 and second by March 2018, but due to procedural delay in signing the agreement and sending first instalment schedule of delivery of aircraft may slightly differ, as per Kansakar.

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