Can't nix Airbus deal: NAC chief

The government cannot back out of the Airbus deal, said national flag carrier Nepal Airlines Corporation (NAC) executive chairman Sugat Ratna Kansakar in the Public Accounts Committee (PAC) hearing today. He added that NAC has no alternative but to go forward.

NAC has given slot money Rs 55 million to Airbus to buy two aircraft -- one A330-200 widebody plane and one A320 single aisle jet -- after the initial agreement during the Dubai Airshow in mid-November. PAC is investigating the case on suspicion of fraud since the beginning.

Kansakar denied commission was taken or that any irregularity was committed in making the deal. "It is a direct deal and there was no commission," he said in front of PAC. Budget 2009-10 has made special arrangement of Rs 10 billion for NAC to buy two aircraft on state guarantee. But the state has not decided any guarantee yet.

NAC cannot buy planes without the state guarantee because of its own weak financial status. The national flag carrier has outstanding debt over Rs 3 billion compared to its total assets of Rs one billion.

The potential financer, Provident Fund (PF) is also seeking security of its investment.

NAC's new management has submitted a business plan which shows profit from the first year of operation. "It is difficult to the trust NAC plan", said a PAC member.

"How can a chronically sick company stand on its own feet in a year?" he asked.

Responding to the query, Kansakar said that he will get profit through complete revival of staffers and adding new human resources. "NAC is planning to recruit the best human resources from the market," he said. Management reform is necessary for profit, he added. PAC members stressed on changing the market strategy of the national airlines. They said NAC should focus on regional markets like China, India and Gulf countries rather than Europe. "Developing confidence within the region and thereafter going beyond can be beneficial for NAC," said a member.

Finally, PAC reserved the decision on NAC until final consultation. "The committee wants transparent deal between Airbus and NAC, nothing else," said PAC chairman Ram Krishna Yadav.

PAC will give the final verdict after consultation with PF, experts and Ministry of Finance.