China Eximbank provides RMB 218.8 million government concessional loan for acquisition of 4 aircrafts (linked to Project #34442)

In 2013, representatives of the Chinese Government and Nepal Ministry of Finance signed multiple financing agreements for the procurement and purchase six China-made airplanes. According to the deal, Nepal will acquire two aircrafts — one 19-seater Harbin Y-12E and one 58-seater Modern Ark 60 (MA60) — with a RMB 180 million Chinese Government grant (see Project #34442) and acquire three Harbin Y12E and a MA60 with a RMB 218.8 million China Eximbank government concessional loan (this Project #34441). The terms of the China Eximbank government concessional loan (GCL) are as follows: 1.5% interest rate, 20-year maturity, and 7-year grace period. The Government of Nepal used the proceeds of the China Eximbank loan to on-lend to Nepal Airlines Corporation (NAC) through a subsidiary loan agreement (SLA). NAC aims to deploy the MA60 aircraft for mountain flights and other reachable places such as Pokhara, Bhairahawa, Biratnagar, Dhangadhi, Nepalgunj and Simara. It also announced that it may operate the Harbin Y-12e for mountain flights and other destinations in far-flung areas. On April 28, 2014, the delivery ceremony of the Chinese MA60 aircraft was held in Kathmandu. Chairman of AVIC International [中国航空技术国际控股有限公司] and Nepal Airlines General Manager signed the MA60 aircraft technical transfer documents. In November 2014, Harbin Aircraft Manufacturing Corporation (now called the Harbin Aircraft Industry Group Co. Ltd.) officially handed over the first of the Y12-Es, 9N-AKS, to NAC at a ceremony held in Kathmandu. According to a 2018 report from the Government of Nepal’s Auditor General, these aircrafts were operating domestic flights, but the NAC was incurring financial losses from the operation of the aircrafts. In 2019, the International Relations Committee of the Federal House of Representatives issued a directive to the Government of Nepal to sell the loss-making aircrafts.

Number of official sources

12

Number of unofficial sources

14