NAC breached law in procurement of wide-body jets: OAG

April 15, 2018 08:50 AM Republica


KATHMANDU, April 15: The recently published report of the Office of Auditor General (OAG) has stated that the Nepal Airlines Corporation (NAC) purchased two wide body aircrafts in an illegal manner.

The 55th annual report of the OAG has said that the NAC has used an agent or a mediator to purchase two wide body aircrafts and called for a global tender instead of bidding a tender from the aircraft manufacturing company. However, the NAC has claimed that no mediator has been appointed while purchasing the wide body aircrafts, which are scheduled to reach Nepal by July. The national flag carrier also claimed that the OAG report is baseless.

The report has mentioned: “NAC has estimated an investment of US$ 11.8 million per aircraft to purchase two wide body aircrafts of A330-200 series of European aircraft manufacturing company Airbus. According to a regulation 236 (1) of Financial By-laws a new aircraft can be purchased from the manufacturing company only but NAC has called for a global tender to purchase two wide body aircrafts.” 

The report further mentioned that the NAC had awarded the tender to one supplier (specially established to transport passenger, goods and parts, to charter flights and to provide aircraft equipments on lease) with an understanding of paying $10.4 million for each aircraft, putting the total money at $20.9 million. 

Taking with Republica, Rabindra Shrestha, spokesperson for the NAC, said that the aircraft purchase process cannot be termed as being against the law. “We cannot say that the NAC has used a mediator to purchase the aircraft,” Shrestha said. “It is not against the law.” He further said that the NAC has signed an agreement on the consensus between American Company ARR Corporation, Hi Fly Airlines of Portugal and German Aviation Capital Corporation.

“The agreement cannot be said to be done through a mediator as we have signed the agreement with consensus among all the three companies,” Shrestha told Republica. The NAC has not signed different agreements with three different companies, rather it has signed one joint agreement with one company, he added. The NAC has already signed a Memorandum of Understanding (MoU) with AAR Corp to buy two wide body aircrafts at Rs 21.58 billion.

As per the MoU, AAR will have to send the first wide-body to Kathmandu by June 2018 and second aircraft one month later. Earlier, the American company had said that it would send the first aircraft within mid-December 2017 and another within mid-March 2018.  The wide-body aircraft will have 264 seats in economy class and 16 in business class.

The NAC plans to use both the aircrafts for long-haul flights. The first wide-body aircraft will make maiden flight either to Tokyo (Japan) or Seoul (South Korea). The aircrafts can fly non-stop for 10 hours.


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