KATHMANDU: The Public Accounts Committee (PAC) has urged the state-run Nepal Airlines Corporation (NAC) to put the aircraft purchase deal on hold till further notice.
“NAC shouldn’t go ahead with buying aircraft till the panel takes its final decision,” said Ram Krishna Yadav, chairman, PAC.
The committee will hold talks with various stakeholders about the NAC’s acquisition plans between November 30 and December 4. NAC board of directors, officials of Provident Fund and Ministry of Finance and experts will be taken into confidence before the PAC gives its nod.
“This will help secure the NAC’s investment plans,” explained Yadav.
The committee has warned the state air carrier to put an end to the sustained media campaign against it. “If it’s not stopped, then we’ll be compelled to take action,” added Yadav.
The cautionary remark came in the wake of a recent press note, circulated by NAC, that indicted PAC for being an “agent against development”. PAC, meanwhile, has raised doubts about NAC’s ongoing activities, seeking clarification from the latter.
It may be recalled that NAC had inked a deal with Airbus at the Dubai Air Show two weeks ago. As per the agreement, NAC plans to buy to two aircraft from the French company. The nation’s flag carrier has already paid Airbus Rs 55 million as slot money.
The NAC went for the acquisition after this year’s budget had pledged NAC Rs 10 billion as state guarantee, and an additional Rs 6 billion by the Provident Fund. NAC, however, has been hamstrung by an acute financial crisis for long, thanks to the mounting losses for the past five years. Last year, its loss stood at Rs 160 million. No wonder, the accrued debt is over Rs 1 billion. While, the cumulative assets are pegged at Rs 2.23 billion.
Sugat Ratna Kansakar, acting chairman, NAC, put up a brave front, maintaining that the new investment would be secure. “We can repay the loan along with the interest in the next seven or eight years,” he said.
But, PAC members refused to buy NAC’s business plan. “It’s wishy-washy. How can NAC become a profitable company sans management reforms?” asked Hrideyash Tripathi, a PAC member.
Captain Kul Bahadur Limbu, general manager, NAC, said that the company could make money if it tapped the emerging neighbouring economies like India and China. “Narrow body planes are suitable for regional operations. The wide body ones are suitable for continental flights. As of now, we need two each of these variants for effective service,” he argued.