NAC struggles to sell Chinese aircraft worth billions of rupees even at scrap value

KATHMANDU, Feb 7: The Nepal Airlines Corporation (NAC) issued global tender bids again on Tuesday after it received no proposal for the five Chinese aircrafts put up for auction by the state-owned airline company for the second time. The NAC is struggling to sell these aircraft but has not been able to do so even at scrap value.

The NAC had initially issued a notice of auction on December 21 to sell two MA-60 and three Y-12E aircraft. A fresh notice has been issued to allow individuals or organizations to submit tenders by February 21 after no company submitted an offer to accept these aircraft by February 4.

The NAC has initiated a second international bidding process to sell these aircraft after receiving approval from the Ministry of Finance. The NAC had previously attempted to auction off the aircraft on December 21, but failed to secure a buyer. These aircraft have been grounded at Tribhuvan International Airport for about three and a half years.

These aircraft were purchased from China 13 years ago. The NAC's board of directors grounded them on July 30, 2020, citing an inability to cover the operating expenses. Although those aircraft were grounded, the NAC has been paying insurance and parking fees to the Civil Aviation Authority of Nepal (CAAN).

Since these aircraft have not been in operation for a long time, the NAC is not able to sell these aircraft even at throw-away prices. NAC sources revealed that they did not receive any proposal as the bidders had to submit a 10 percent bond of the proposed amount during the global tender.

The current valuation of the five aircraft stands at Rs 380 million. "This valuation is merely a scrap value. If the aircraft had been operational, they would have been more valuable. However, their grounding has rendered them worthless," said a source at NAC. Thirteen years ago, the government had purchased six Chinese aircraft for Rs 6.671 billion which included concessional loans and grants from China. Previously, these aircraft were used for flights to Lukla and Phaplu.

Former Minister for Culture, Tourism, and Civil Aviation, Yogesh Bhattarai, had suspended their operation during his tenure. "The aircraft were incurring only minimal losses when flights were operated. After discontinuing the flights, the losses escalated significantly," said an official of the NAC.

The flights of those aircraft were halted due to the vested interests of a private-sector airline, claimed the source. Political motives were also observed during the procurement of these aircraft. Nepal was persuaded to buy the Chinese aircraft through grants and subsidized loans. Additionally, it is believed that the European Union (EU) blacklisted Nepali airlines companies due to these aircraft.