September 11: The government has suffered a serious setback from Pokhara Regional International Airport (PRIA) built with Chinese investment. The setback is mainly due to the government’s inability to make the airport commercially viable. The PRIA was built with loan investment of Rs 22 billion from China.
Therefore, the government has done its homework to submit a proposal to the Chinese government for loan waiver during the upcoming state visit of Prime Minister Pushpa Kamal Dahal to China, said a highly-placed government source.
A senior official of the Office of the Prime Minister and Council of Ministers told New Business Age that the proposal related to loan waiver is being prepared in coordination with the Ministry of Foreign Affairs, Ministry of Tourism and Ministry of Finance.
Sources say that government officials are preparing the proposal in the context that it has been bearing the burden of paying the principal and interest of the loan due to lack of international flights at the newly built airport.
In 2016, China's Exim Bank decided to provide a loan of Rs 22 billion for the construction of the airport. After that, the construction of the airport was started and it became operational from January 1 this year.
As per the agreement, the government will not have to pay the loan in the first seven years after signing the pact but the dues must be cleared within the next 20 years.
According to the agreement, the government paid the first installment of 53.28 million yuan (about Rs 85 million) in April. According to the agreement, the second installment should be paid on September 18.
The Government of Nepal has been exempted of paying interest on 25 percent of the total loan amount. The government has to pay around Rs 2 billion annually as interest and principal amount to the Exim Bank of China. Until the year 2035, installments of interest and principal amount must be paid every 6 months.
Budhisagar Lamichhane, joint secretary of the Ministry of Culture, Tourism and Civil Aviation, says that in the present context, there is no situation to pay the principal and interest of PRIA from the airport’s own income.
"If the current situation continues, we will not be able to pay the debt," he said, "We will have to channel the earnings of other airports to pay for the loan."
He says that there is no alternative but to promote Pokhara Regional International Airport. However, after eight months of operation, regular international flights have not been taking place through the airport. There have been only two international flights from this airport so far.
The last international flight took place on September 9. A plane from Bhutan landed at the Pokhara Airport with three passengers from Paro Airport. Shortly thereafter, the aircraft returned to Bhutan carrying 42 American tourists.
Earlier, a Sichuan Airlines aircraft landed in Pokhara carrying 84 Chinese people who were participating in the Dragon Boat Race Festival on June 21.
There is also confusion regarding the loan given by China to Pokhara International Airport. China calls it the flagship project under its 'Belt and Road Initiative'. The spokesperson of the Chinese Embassy in Nepal congratulated the Government of Nepal and the people of Nepal on the day of the inauguration of the airport and said, “Pokhara International Airport is a major project of Nepal-China BRI cooperation. Hearty congratulations to the government of Nepal and the people of Nepal.”
According to high-ranking sources, the government is also preparing a proposal seeking loan waiver of Chinese built Harbin aircraft that are currently grounded.
Prime Minister Dahal on Sunday called for an all-party meeting to discuss his impending visit to China. The discussion held at the Prime Minister's Office, Singh Darbar, was attended by former prime ministers, leaders of major political parties represented in the Parliament, the foreign minister, and the former foreign ministers. During the meeting, they suggested to pay attention to the issue of balanced neighborhood policy and development.
