The regulatory body decided to go ahead with its controversial plan despite strong objection from board member Bodhraj Niraula who argued that CAAN is not legally authorized to purchase, operate or lease aircraft.
Niraula, who is also Director General of the Customs Department, was alone in disagreeing with the decision and he wrote a note of dissent.
A CAAN meeting chaired by Minister for Tourism and Civil Aviation Sharad Singh Bhandari decided two weeks ago to purchase the aircraft for commercial as well as “internal purposes”.
Objecting to the decisions, Niraula argued that purchasing aircraft is not the work of CAAN and is not justified in any way.
Secondly, he said purchasing craft is not CAAN´s prime agenda and runs counter to its legal mandate. Thirdly, CAAN needed prior consent from the Ministry of Finance before taking a decision involving millions.
“CAAN´s basic function as a regulatory body is not to buy aircraft but to regulate air services,” said Niraula.
CAAN Director General Keshavraj Khanal admitted that the regulatory body has begun the aircraft purchase process. “Yes, our objective is to conduct regulatory activity, and we want to use the aircraft for that.” He, however, added that CAAN plans to use the aircraft for commercial purposes also.
This runs up against the government´s earlier decision to prevent the Nepal Army (NA) from procuring aircraft for similar purposes. The government had canceled NA´s bid to purchase aircraft for commercial purposes. As per existing law, only Nepal Airline Corporation, other than the private sector, is authorized to buy aircraft for commercial uses.
Asked about legal constraints against aircraft procurement, Khanal said CAAN is using the aviation operations fund, which includes money received from the United Nations Development Program (UNDP).
The Air Transport Support Center, the precursor to CAAN, operated an aircraft provided by UNDP. After the aircraft crashed, UNDP gave US$4 million to the government as insurance compensation. CAAN has now decided to use that money for purchasing another aircraft. “UNDP has suggested to us to use that money only to buy aircraft,” he said.
However, board member Niraula says it is ridiculous to argue that money received from UNDP can only be used to buy a plane. “If that´s the case, CAAN can lend that money to NA on interest."
CAAN Director General Khanal, however, said they will go for a bidding process after seeking government approval. “We realize that CAAN should take government approval and we are doing so.”
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