Nepal Airlines Corporation (NAC), trading as Nepal Airlines (RA, Kathmandu), is asking NPR220 million Nepalese rupees (USD1.65 million) for five Chinese-manufactured aircraft that have sat unused at Kathmandu's Tribhuvan International Airport since mid-2020.
According to The Kathmandu Post, an independent assessor, US-based Aviation Asset Management Inc., arrived at the scrap value price after being commissioned to appraise the planes earlier this year. The recommendation to sell the two 56-passenger MA-60s and three Y12s for scrap follows several failed campaigns by NAC to offload them.
The recommendation, which cost the state-owned NAC USD20,000 to commission, has reportedly left the airline and government in a quandary. The airline is keen to dispose of the aircraft but reluctant to do so at such a low price, given the Chinese government, via the EXIM Bank of China, provided a NPR3.72 billion (USD27.9 million) soft loan (plus a NPR2.94 billion (USD22.1 million) grant) to buy the planes.
The pair of MA-60s are 9N-AKQ (msn 1007) and 9N-AKR (msn 1008), while the three Y12s are 9N-AKS (msn 26), 9N-AKT (msn 27), and 9N-AKV (msn 29). A fourth Y12, 9N-AKU (msn 28), was written off after a runway excursion at Nepalgunj Airport in March, just before the decision was made to ground the Chinese-made aircraft in July that year.
Nepal's Ministry of Finance took out the loan in November 2012. It came with a seven-year holiday on interest and principal repayments. However, the holiday is now over. In addition to principal repayments, the ministry is now paying interest of 1.5% p.a. on the outstanding amount plus an annual service and management fee comprising 0.4% of the outstanding amount. In turn, the ministry is charging NAC interest of 1.75% on the outstanding amount. But neither the airline nor the ministry are believed to have made any interest or principal repayments, and the EXIM Bank has begun compounding interest. In addition, NAC is racking up parking fees at the airport.
The newspaper cites a Nepal Airlines spokesperson saying the Aviation Asset Management report was sent to the ministry last month for approval. However, in response to inquiries, the ministry says the NAC board needs to sign off on the report and send it to them for actioning. The ministry says neither has happened. ch-aviation has contacted NAC and the Ministry of Finance for comment.
ch-aviation has tracked the fate of these aircraft since their acquisition. After retiring them, NAC attempted to dispose of the aircraft at least three times, most recently in mid-2023. At the time, ch-aviation also reported on pushback from the Chinese Embassy in Kathmandu, who said that selling the aircraft too cheaply would send the wrong message. More recently, before the Nepali prime minister's late September visit to China, ch-aviation reported that he would ask the Chinese government to forgive the loan.
"There is no way to pay the loan," a Nepali official said at the time. "We have seen that the debt can be waived because there is a (Nepalese) government led by the leader of the party that is close to China." ch-aviation has contacted the prime minister's office for comment on the outcome of those talks.
