NAC prepares to pay Rs 55 billion government debt and buy some new aircraft
KATHMANDU, Jan 24: The national flag-carrier Nepal Airlines Corporation (NAC) has started looking for new loans at subsidized interest rates to purchase new aircraft and to pay the debt of the aircraft currently in flight. On Tuesday, the NAC made a public announcement and demanded a loan amount of Rs 135 billion from domestic and foreign institutions.
It has been mentioned that Rs 55 billion will be used to pay the debt of the aircraft currently in flight, Rs 75 billion will be used to purchase new aircraft and Rs 5 billion will be used by the NAC to build its own hangar.
It is mentioned that the NAC will take loans from domestic and foreign organizations at cheap rates and repay the loans taken from the Employees Provident Fund and Citizen Investment Trust. The loan taken by the corporation from these two institutions for the purchase of 4 AWAS aircraft in international flights has reached about Rs 47 billion. Outstanding debt from the Chinese aircraft purchased by the government is also part of this initiative.
Revised interest rate corridor system introduced
Ubaraj Adhikari, executive chairman of the NAC, said that the NAC has made a strategy of taking new loans and repaying the old ones at a lower interest rate than the current loans taken at around 10 percent per annum.
The NAC has found it difficult to arrange the management as the interest of the used loan is expensive. “Even though domestic and foreign organizations say that they will give us loans, it becomes clear who will give them how much after formally asking for a proposal,” said Adhikari.
According to the 10-year plan made by the NAC, this loan was sought for the immediate purchase of three new aircraft for international flights. NAC officials also acknowledge that the NAC has not been able to go to profitable destinations due to the lack of enough aircraft to expand international flights.
For financial management, the NAC has set the condition that Rs 25 billion in such loans sought from domestic and foreign organizations will be given at an unchanged interest rate. It is also mentioned that the interest rate will be fixed by mutual agreement between the corporation and the lender. The NAC has mentioned that the interest rate and foreign exchange rate for such loans can be fixed as approved by the government.
It has also been mentioned that the new loans taken by the NAC will be secured by the aircraft, the project of purchasing aircraft and the physical assets of the NAC.
It has also been mentioned that the financial management proposal requested by the NAC within the next 45 days will be opened on March 7. The company that submits the proposal must have invested in a project worth USD 1 billion and must have a minimum of seven years of experience.
The NAC is also preparing to lease two Airbus aircraft immediately. The NAC has stated that a report has been submitted to the board of directors on the study of the chartering of aircraft. It has also been mentioned that if the board of directors passes the proposal after the necessary discussion, two aircraft for international flights will be leased immediately.
In addition, the NAC is purchasing new aircraft for three domestic flights. For this, the NAC says that technical evaluation is underway after necessary discussion on the proposals requested by the NAC. According to the NAC, the only thing left to do is to bring the proposals to the board of directors and select a suitable company. The NAC is also saying that there is no problem in buying aircraft for domestic flights, so the proposal was approved as the NAC is going to purchase three aircraft for domestic flights from internal resources.
