January 3, 2023
KATHMANDU – Pokhara rang in the new year to the whine of turboprop engines as Nepal opened another international airport in under a year, highlighting its airport building spree.
Prime Minister Pushpa Kamal Dahal declared the airport open while the city of Pokhara gave its citizens the day off to allow them to celebrate the fulfilment of a five-decade-old dream.
The airport in the scenic Himalayan valley is the gateway to the world-famous Annapurna Circuit trekking route. But there were no international flights on opening day.
Buddha Air Flight 609 from Kathmandu, carrying the prime minister and his entourage, arrived late at 12:51 pm due to weather problems.
An Airbus A320 of Himalaya Airlines made a demonstration flight, arriving at 1:44 pm from Kathmandu.
In the making since 1975, public pressure, shady deals, dodgy contracts and the Covid crisis have dogged the construction of Pokhara international airport. Construction started when the country’s perennial political instability had reached a new peak.
The airport has also been examined in a broader geopolitical context. The construction was bankrolled by China, and on Saturday, a day before the inauguration, Beijing sent a clear message about its influence in Nepal, dragging the project into yet another geopolitical chessboard.
The Chinese Embassy wrote on its Twitter account, “This [Pokhara airport] is the flagship project of the China-Nepal BRI cooperation.”
Four Nepali government officials, to whom the Post talked, responded that the project had been envisaged before the BRI even existed.
Like hydropower plants and Bhairahawa airport, officials said Pokhara’s new airport had become part of a proxy battle between India and China. “The loser of the proxy battle, however, will be Nepal,” they added.
Tanka Karki, former ambassador to China, told the Post that an inappropriate escalation of geopolitics will create more problems.
“What’s the benefit of the superpowers making Nepal a prey? If the West refuses to use projects constructed by China, and if India refuses to use projects built by China, Nepal will be a loser in either case,” he said.
“We should avoid these cold wars if we want loans and aid from abroad. We should mend our home first and address our needs rather than play geopolitical cards,” Karki said.
The government took out a $215.96 million soft loan from China EXIM Bank in March 2016 to pay for the project, which was implemented on an engineering procurement and construction model.
The runway of Pokhara international airport is 45 metres wide and 2,500 metres long, and has an east-west orientation. A 1,200-metre-long and 23-metre-wide taxiway connects the runway with the parking bays, hangars and terminals.
Some officials have expressed doubts over whether the new airport will be able to get enough airlines.
They say that it may fare worse than Gautam Buddha International Airport in Bhairahawa, which has been able to attract only one foreign airline—Jazeera Airways—since it opened in May.
Jazeera Airways dropped its plan to operate Kathmandu-Kuwait flights from December 20.
Even the audit report of the Office of the Auditor General pointed out that due to lack of “technical preparation for the commercial operation of the new airport, it looks like Pokhara international airport will not come into operation immediately, even after the construction is completed”.
The report also said that the new facility would make the civil aviation body incur financial losses.
On Saturday, Dhananjay Regmi, chief executive officer of the Nepal Tourism Board, made an eye-opening remark.
“We have now experienced that a lavish inauguration ceremony does not guarantee the regular operation of an airport. We have to be careful to ensure that the new international airport in Pokhara will not share the same fate as the one in Bhairahawa,” the head of the country’s tourism promotional body said.
Government officials and the Civil Aviation Authority of Nepal are still clueless about how to attract foreign airlines to the new airport. Travel trade entrepreneurs said little had been learned from the experience of the Gautam Buddha International Airport.
“The fanfare has ended at both airports now. The government needs to be serious about how to operate them, or the failure of these mega projects could deal a severe blow to the economy,” said Ashok Pokharel, president of the Nepal Association of Tour Operators.
“The government should take India into confidence and ask for air routes that have been pending for a long time. We need tourists, trade and strong air connectivity, particularly with India, if our tourism is to flourish,” said Pokharel.
The airport site selection, detailed engineering work and Master Plan of New Pokhara Airport were prepared in 1971 by DIWI, a German consulting engineering firm. This work was performed for the Department of Civil Aviation under an Asian Development Bank loan under the Airport Development Project in Nepal.
The government had acquired more than 3,106 ropanis of land in 1975 to build the airport.
A detailed engineering survey was conducted by the Department of Civil Aviation in 1993. A review of the New Pokhara Airport Master Plan of DIWI was made by JICA in 1988.
With the Maoist insurgency—which began the same year the Fulbari, one of Nepal’s biggest luxury properties, was launched in 1996—reaching new heights, the hospitality sector in Pokhara almost collapsed. The airport development too halted.
In 2009, the elected Maoist government led by Pushpa Kamal Dahal gave the go-ahead for Pokhara international airport.
After the insurgency ended, locals of Pokhara started to voice support for the airport’s construction. The project lay dormant until 2011 when it was revived by a deal reached behind closed doors.
In 2011, the then finance minister Barsha Man Pun was found to have signed a memorandum of understanding with China CAMC Engineering Co, committing to support it to win the building contract.
The issue came to light after Nepali Congress leader Deep Kumar Upadhyay circulated the MoU at a meeting of the parliamentary Public Accounts Committee, which later summoned the Tourism Ministry and civil aviation authority officials over the controversy created by the short deadline given to bidders.
The MoU had committed that “the government of Nepal shall provide CAMC solid and substantial support” in a tender that the Civil Aviation Authority of Nepal would call—for an engineering, procurement and construction (EPC) contract—for the regional international airport.
The MoU was signed, on Nepal’s behalf, by Pun, and by Lui Shengcheng, regional general manager of China CAMC Engineering.
The deal was inked on September 20, 2011 at the Ministry of Finance in Singha Durbar. The then energy minister Posta Bahadur Bogati and Chinese Ambassador to Nepal Yang Houlan signed the accord as witnesses. Following the deal, the Finance Ministry instructed the civil aviation body to invite bids for developing the regional airport.
As the project became engulfed in controversy, locals of Pokhara again resorted to protests. Several hundred protesters from the lake city knocked on the doors of the government headquarters at Singha Durbar, demanding that the construction of the proposed regional international airport in Pokhara be started immediately.
They picketed Singha Durbar for more than two hours, urging the government to seriously take up the airport project that had been in limbo since 1975.
Pokhara possesses seven lakes, offers spectacular views of mountain ranges including Annapurna and Dhaulagiri, and is the jumping-off point to famous religious places like Muktinath and Jomsom.
A modern airport was envisaged in Pokhara after tourist arrivals showed signs of recovery.
The Civil Aviation Authority of Nepal invited bids to construct the airport on February 9, 2012.
Then another controversy surfaced. As China EXIM Bank was funding the project, it would allow only developers in its list to participate in the bidding.
According to one retired official at the Civil Aviation Authority of Nepal, nearly 22 firms had purchased the bid documents, but only nine returned them.
“The issue was still complicated as there were other bidders who were not in China EXIM Bank’s list. Later, six bidders disappeared. The top three were all from the bank’s list.”
On July 18, 2012, the civil aviation body tender evaluation committee opened the financial proposals for the project. It was again dragged into controversy after labour unions in the Civil Aviation Authority of Nepal opposed the deal on account of its large price tag, arguing that it was not economically viable under the authority’s existing financial status.
Surprising all, the lowest bidder China CAMC quoted a price of $305 million, which was 85 percent higher than the government’s estimate. The government had expected the project to cost around $166 million. The government at this time had planned to borrow $145 million or more in soft loans from the bank to build the airport.
The other two Chinese companies competing for the project were Sinohydro Corporation and China International Water and Electric Corporation. They had quoted $337.82 million and $349.28 million respectively.
“It looked like all three short listed companies’ quotes were planned. If one failed, the other would get the contract,” said the retired official, who spoke on condition of anonymity.
The Commission for the Investigation of Abuse of Authority (CIAA) seized the documents related to the tendering process of the proposed airport in Pokhara on suspicion of financial irregularities.
The project consequently stalled. Officials from Kathmandu and Beijing then started to meet regularly.
In January 2013, China CAMC wrote to the Tourism Ministry expressing its willingness to build the project at the government-estimated cost.
Things got more complicated after China Airport Construction Company, a consultant appointed by China CAMC, submitted another study report to Nepal’s civil aviation body quoting a price of $264 million. Adding 16 percent price escalation and 13 percent VAT, the estimated outlay would come to around $300 million, nearly equal to the original cost quoted by China CAMC.
The controversy reached a peak after locals of Pokhara started a hunger strike in 2013 which lasted more than 100 days.
On April 7, 2014, a board meeting of the Civil Aviation Authority of Nepal chaired by the then tourism minister Bhim Acharya approved the project under a revised cost of $215.96 million. The price tag had been recommended by a three-member independent panel formed by the government.
The Tourism Ministry then tabled the proposal with the latest estimated cost in the Cabinet, but the Khil Raj Regmi-led administration put the project on the back burner.
It was revived by then tourism minister Acharya under the Sushil Koirala-led government.
In May 2014, the then civil aviation body director general Ratish Chandra Lal Suman and China CAMC Engineering’s Chairman and President Lou Yan signed the $215.96 million deal on behalf of their respective governments.
Construction was delayed after China EXIM Bank set a condition that a joint escrow account should be set up into which the Civil Aviation Authority of Nepal, the project executing agency, should deposit the income generated from all its airports.
The authority refused to do so which delayed the release of the project funds, and construction stalled. The two parties then agreed that only revenues generated by Pokhara international airport would be put into the account to repay the loans.
The soft loan deal was signed during the then prime minister KP Sharma Oli’s visit to Beijing in March 2016. In April 2016, construction commenced after PM Oli laid the foundation stone.
China CAMC Engineering then began work at the project site on November 1, 2017. The first loan disbursement took place on April 1, 2018.
As per the agreement, the government will receive the loan from China EXIM Bank, 25 percent of which will be interest-free. The interest on the rest of the loan has been fixed at 2 percent per annum.
The loan repayment period has been fixed at 20 years, including a grace period of seven years when no interest will be charged.
The Chinese-funded scheme had been racing ahead of schedule and was in line to open six months before the planned date of July 10, 2021. But the coronavirus threw a spanner in the works.
The government had first pushed back the original deadline of July 10, 2021 by one year to July 10, 2022, due to Covid-19 disruptions, which stalled the procurement of materials and prevented workers from getting to the construction site.
While the government remains clueless about operating the country’s two new international airports, Prime Minister Dahal on Sunday said the government would, at any cost, build a fourth international airport in Nijgadh.