Sugat Ratna Kansakar, executive chairman of NAC, told Republica on Monday that their initial plan was to acquire two new aircraft through loans from international banks and financial institutions. “We only turned our attention toward Employees´ Provident Fund (EPF) after we found it interested in our proposal,” Kansakar added. [break]
NAC had approached EPF for a loan of Rs 10 billion. But the latter had asked the national flag carrier to seek government guarantee for the loans. But the Finance Ministry had refused to stand as a guarantor.
“Though we couldn´t get EPF loans, we still have options for to finance aircraft purchase,” Kansakar claimed.
Credit LOYM Bank of France, Dubai Int´l Financing Company of UAE, China Exim Bank of China and other international aircraft leasing companies had approached NAC to provide loans for aircraft purchase, according to Kansakar.
“But they dropped their proposal after we started negotiations with EPF,” Kansakar said, adding, “We don´t need to furnish government guarantee to get loan from international lenders. They just need a formal decision from our board.” He further added that the international lenders are still ready to provide loan to the national flag carrier.
Aircraft manufacturers Boeing and Airbus had suggested NAC to acquire loan from international lending agencies to finance purchase of aircraft before the national flag carrier started formal purchase process. He also said interest rate proposed by international lending agencies was far lower than the 11 percent fixed by EPF.
The national flag carrier had purchased two Boeing 757 aircraft two decades ago with $107 million loan taken from international financial institutions. NAC had paid $169 million (including interest) in fifteen installments.
“Though we are no short of options, we are still for purchasing aircraft through international resources. EPF is still the best option for us,” he added.
Though the Finance ministry has refused to stand as a guarantor for loans, NAC officials say they were still for acquiring loans from EPF.
A few days ago, the Finance ministry directed NAC to annul its aircraft purchase process and recover lock-up money of $750,000 forwarded to European aircraft manufacturer Airbus. The Ministry also asked NAC to recover the amount with interest from concerned official if Airbus refused to return the lock-up amount.
Though Kansakar said he is yet to receive Finance ministry´s direction, he said there is the possibility of recovering the lock-up amount by filing a case in international court, if the deal with Airbus is annulled.
But experts say NAC would face loss worth millions of rupees if it lost the case in international court. But if NAC buys aircraft from Airbus, it will deduct the lock-up money from the total amount.
NAC had signed a deal with Airbus to purchase one wide-body aircraft worth $92.84 million and a narrow-body aircraft worth $41.28 million.
The country´s target of welcoming one million visitors during Nepal Tourism Year 2011 campaign will receive a major setback if new aircraft is not added to NAC´s fleet.
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