The Finance Ministry has fasttracked the process of signing loan and grant agreements with China to procure airplanes for the ailing Nepal Airlines Corporation (NAC). The Finance Ministry’s move follows the request from the Ministry of Culture, Tourism and Civil Aviation to proceed ahead with the deal after the Civil Aviation Authority of Nepal (CAAN) issued type-certificate to Chinese-made MA60 aircraft last week, allowing the plane to enter the Nepali skies for the first time for civilian transport. China has pledged a 19-seater Harbin Y-12e and a 58-seater MA60 (Modern Ark 60) turboprop planes in grant, and the government plans to buy four more aircraft — three Harbin Y-12e and an MA60 — taking soft loans from the China EXIM Bank. “We have to sign two separate agreements for loan and grant. We have sent the drafts of the two agreements to the tourism and the law ministries for their comments and language to be used in the draft,” said Finance Secretary Shanta Raj Subedi. He said the exact amount of the loan to be taken from the Chinese bank and the interest rate are yet to be fixed. Tourism Ministry officials estimate that the four aircraft could cost $35 million for a combined package that includes spare parts and pilot training, among other facilities. The Type Certification Board of the CAAN after a two-week China visit had submitted its report to its Director General Ratish Chandra Lal Suman in mid-September, recommending that the MA60 aircraft’s technical and other capabilities compliances “are reliable”. “We decided to proceed ahead with the pact after the CAAN confirmation that the proposed Chinese jets are fit for the Nepali skies,” Subedi said. Some analysts, however, have raised questions over the MA60’s airworthyness as it has not yet been certified by the Federal Aviation Administration’s (FAA) Federal Aviation Regulations (FAR). Sources said the Nepal government needs to finalise the deal before the end of the Chinese fiscal year. China’s fiscal year begins from January 1 and ends on December 31. On November 29, 2012, the NAC had signed a commercial agreement with the AVIC International Holdings, a Chinese government undertaking, to procure the six aircraft. An understanding was reached that the NAC will receive two aircraft in grant within two months after finalising the loan agreement, and the rest after five months of the first delivery. China has in principle agreed to the proposal of the Nepali side to provide a five-year grace period for the loan and interest repayment. The Nepali side had also proposed a 30-year payback period for the loans. On August 7, 2011, NAC had written to the Finance Ministry, requesting it to purchase eight aircraft in foreign grants. In November 2011, the ministry requested China to provide the aircraft either in grant or under soft loans. The Chinese side responded positively, expressing their readiness to provide some aircraft in grant and some under soft loans. Subsequently in December 2011, the Chinese government formally informed the Finance Ministry that three aircraft would be provided to the NAC in grant and the others under soft loans. However, the plan was revised, with the Chinese government deciding to gift only two aircraft in grant. An NAC technical team then were sent to China for the inspection of the aircraft, which reported that the airplanes were fit for the Nepali skies. However, the process landed in controversy, with the Commission for Investigation of Abuse of Authority being called to probe alleged irregularities. The government revived the plan on October 17, 2012, under its Immediate Governance and Economy Reform Action Plan 2012. The Canadian International Development Agency had donated seven Twin Otters to NAC from 1972 to 1979. However, the corporation dœs not have a single plane to serve its domestic sector now. According to the NAC, two Twin Otters can be put back in service after maintenance. It says if it gets the Chinese aircraft, it will be able to compete with private airlines and expand its services. chinese aircraft for nac Y12E aircraft. MA60 aircraft. The Finance Ministry’s move follows the request from the Tourism Ministry to proceed ahead with the deal after CAAN issued type-certificate to Chinese-made MA60 aircraft last week
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