Kathmandu: In a bid to revive its crisis-ridden national flag carrier, Nepal Thursday initialled a $34 million deal for purchase of six medium-size aircraft from China
Nepal Airlines will use the aircraft for domestic flights. This is the biggest consignment the airlines is acquiring in its 35-year history. The price of the aircraft is equivalent to NRS.6,671 million or 208 million yuan.
Nepal`s Finance Secretary Shanta Raj Subedi signed the framework agreement with Chinese Ambassador to Nepal Wu Chuntai in Kathmandu.
Since the past two years, China has been persuading Nepal over three projects -- purchasing the six aircraft, building a 650 MW hydropower project and building a state-of-the-art airport in the popular tourist destination of Pokhara in western Nepal.
Nepal has already given the go-ahead for building the West Seti hydropower project, and talks are underway to construct the airport in Pokhara.
There has been a lot of debate in Nepal`s aviation sector whether Chinese aircraft would fit in Nepal`s complex geographical terrain and its climatic conditions.
Experiences with the Chinese Y-12 plane in Nepal have not been successful due to lack of a maintenance programme.
"Without a maintenance programme, it is not economically and technically viable to fly the Y-12 in Nepal," said an aviation expert.
The Yeti Airlines and now defunct Nepal Airways had used the Y-12. However, the planes did not last more than six years for lack of maintenance and wear and tear on Nepal`s poor airfields.
The vigorous lobbying by China for purchase of the aircraft has raised several questions at a time when Nepal is in transition, an aviation expert said.
"It would not be a surprise if China gets the other three projects done along with this one, which will give the country a huge political and economic mileage in Nepal. Investing billions of dollars at this juncture leaves many suspicions," the expert said on condition of anonymity.
A statement by Nepal`s ministry of finance said China has agreed to provide grant and concessional loan assistance of 208 million yuan to acquire and purchase six aircraft.
Out of the total assistance, 180 million yuan will be used to acquire one MA-60 and one Y-12E aircraft on grant basis and up to 28 million yuan will be used to purchase one MA-60 and three Y-12E aircraft on a loan basis, the statement said.
The loan was received from the Export-Import Bank of China. The loan will be repaid in 20 years with a grace period of seven years and an interest of 1.5 percent.