Nepal asks China to convert Pokhara airport loan into grant to ease financial burden

Kathmandu, Mar 22: Nepal's Prime Minister Pushpa Kamal Dahal recently announced diplomatic efforts to transform a loan for Pokhara International Airport into a grant, acknowledging its failure to generate income and its mounting debt. This decision followed concerns raised by opposition lawmaker Chanda Chaudhary regarding escalating losses and debt accumulation.

 

 

 

 

 

 

Opened on January 1, 2023, Pokhara International Airport has struggled to attract frequent international flights, save for sporadic chartered Chinese flights. In a loan agreement reached with China on March 21, 2016, Nepal committed to repay 1.37 billion Chinese yuan by 2036, with a portion interest-free. Despite assurances from Prime Minister Dahal and theoretical agreements during his China visit in September 2023, operational challenges persist, exacerbated by the rejection of the airport's association with China's Belt and Road Initiative.

 

 

 

 

The airport's development, primarily facilitated by Chinese firms, reflects the pitfalls of importing China's infrastructure model. Sinomach's construction arm, China CAMC Engineering, led the project, importing materials and technology from China. Investigation revealed a narrative of profit maximization and circumvention of Nepali oversight, leaving Nepal burdened with debt and compromised infrastructure.

 

 

 

 

 

 

 

 

 

The Pokhara project's inception was marred by irregularities, with a memorandum of understanding signed before official bidding, favoring Chinese firms exclusively. Despite initial bid inflation, subsequent reductions, and a 20-year agreement, issues arose due to inadequate oversight and compromised standards. Reduced consultant budgets and omitted tests jeopardized the airport's integrity.

 

 

 

 

Projections of passenger influx haven't materialized, prompting Nepal's plea to convert the loan into a grant. However, joint statements between China and Nepal have not addressed loan conversion, exacerbating financial uncertainties. Geopolitical tensions with India further complicate the airport's prospects, underlining concerns about sustainability and transparency in infrastructure development.

 

 

 

 

The Pokhara Airport saga epitomizes the challenges inherent in large-scale infrastructure projects, particularly when undertaken through foreign loans and partnerships. From flawed bidding processes to compromised oversight and geopolitical ramifications, its narrative serves as a cautionary tale, urging stakeholders to prioritize transparency, accountability, and local sustainability in future ventures.

 

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