Nepal’s state-owned Citizen Investment Fund (CIF) has declined to provide further aircraft acquisition loans to Nepal Airlines (RA, Kathmandu), citing the state-owned carrier’s history of non-payment on an existing loan.
Nepal’s Tourism Mail outlet cites CIF CEO Raman Nepal saying he deemed the state-owned carrier a bad credit risk and would not extend it further funding. “No matter what the pressure, we cannot give loans to the corporation which is known for its defaults on loans,” he said.
Nepal says the amount outstanding on the existing loan to buy an aircraft has ballooned to NPR16 billion Nepalese rupees (USD120 million). He said the airline had not been making regular repayments, and he described a highly publicised payment in June of NPR250 million (USD1.9 million) as “tokenistic.” The original loan was for NPR12 billion (USD90 million).
In 2018, Nepal Airlines purchased two A330-200s, 9N-ALY (msn 1872) and 9N-ALZ (msn 1878), which remain in the fleet and are the backbone of the carrier’s medium and long-haul flying. Nepal Airlines acquired one of the planes with funding from the CIF and the second via funding from the Employees Provident Fund (ETF). Around 1.3 working Nepalis pay into pension funds run by these entities.
Recently, ch-aviation reported that the ETF CEO had refuted claims by Nepal Airlines and a government minister that it was servicing its loan with ETF. CEO Jeetendra Dhital told another Kathmandu-based media outlet that the airline was not interested in making loan repayments because the government guaranteed it. “Nepal Airlines has not paid us full instalments regularly,” he said. “On the other hand, they have spread the word that they have paid.” Nepal Airlines now owes the EFT NPR29 billion (USD217.4 million). The original loan was for NPR22 billion (USD165 million).