January 5: Cash-strapped Nepal Airlines Corporation’s (NAC) property is likely to be auctioned due to the state-owned company’s failure to repay its loan on time.

Current circumstances indicate that NAC might need to auction its property if the government does not pay the loan and installment on time. NAC had received a loan from the Citizens Investment Trust (CIT) and Employees Provident Fund (EPF) six years ago with the government pledging to be the guarantor.

NAC has not paid any installment or interest of the loan taken from CIT and EPF since 2075 BS. The flag carrier of Nepal has not shown any interest in repaying the loan despite receiving repeated requests from the two bodies.

Officials of both the funds are now appealing to the finance ministry to recover the loan. On Monday alone, the representatives of CIT and EPF met officials of the finance ministry, including Revenue Secretary Krishna Hari Pushkar. During the meeting, they did not receive a satisfactory answer.

Pushkar urged the representatives of the Employees Provident Fund and Citizens Investment Trust to collect the loan from the NAC as the government is not able to provide the amount in the current circumstances.

Revenue Secretary Pushkar reportedly suggested the officials to collect the loan by auctioning the property of NAC. Both the CIT and EPF are opting for auctioning NAC’s property kept as collateral as the government has shown no interest to repay the loan and neither has NAC.

The NAC had borrowed Rs 34 billion from these two bodies at different times to procure two narrow-body and a wide-body aircraft. Similarly, the corporation also has a long-term debt of Rs 37.60 billion, including Rs 3.60 billion taken to purchase Chinese aircraft.

NAC had agreed to repay the loan of all four Airbus aircraft with within 15 years in 60 installments with both EPF and CIT . The airline has not paid any new installments except 17 installments of Citizens Investment Fund for narrow-body aircraft and one installment of wide-body Airbus aircraft.

Raman Nepal, executive director of the Citizens Investment Trust, said that the Ministry of Finance has suggested auctioning the assets of NAC to collect the loan.

According to him, discussions are underway to take necessary action.

The NAC had taken Rs 12 billion loan from the CIT alone, and now the total loan with interest has reached Rs 16 billion. The total debt of NAC is Rs 50 billion and the accumulated loss is Rs 11 billion, according to the information shared recently by Finance Minister Janardan Sharma with high-ranking government officials.

According to the officials, NAC has incurred such huge loss because it has recruited more than 500 unnecessary staffers.