The Nepal Airlines Corporation, after failing to pay it loans by earning good revenue by increasing flights, has started several auctions to repay the installment of loans taken to buy the Airbus aircraft.
According to the agreement, the corporation has now started to indicate that the number of installments needs to be increased. By increasing the number of installments, the corporation aims to facilitate the repayment of loan obligations. The corporation has corresponded with the lender Employees’ Provident Fund (EPF)and the citizens investment Trust (CIT).
‘There is discussion going on to increase the number of installments,’ said Ramesh Paudel, spokesperson for the corporation.
As the corporation has been continuously incurring losses, it has not been able to repay the installment amount to both the EPF and CIT as per the agreement. In every three months, the corporation has to pay installments of Rs 2.53 billion to the EPF and Rs 630 million to the CIT.
‘Out of the loan liabilities taken for the purchase of two narrow-body and two wide-body aircraft, the installment of two narrow-body aircraft has been fully paid by the month of Chaitra 2080 BS, and Rs 5.39 billion out of the partial installment of two wide-body aircraft has been paid till the end of Chaitra 30,’ it was stated.
The corporation has been unable to repay the installments of a loan of around Rs 34 billion taken for the purchase of aircraft. Among them, around Rs 30 billion is the amount to be received by the savings fund.
Since taking loans in 2074 BS to buy two wide-body aircraft, the corporation has been continuously in deficit. The corporation has suffered losses of around Rs 9.3 billion annually from the operation of wide-body aircraft, which has increased more than Rs 2 billion every year than before. The fiscal year 2077/78 recorded a loss of Rs 4.4 billion.
The corporation has not been able to make profits from the operation of wide-body aircraft, while one of the narrow-body aircraft has been grounded since Mangsir 15 due to a lack of profit. The reason for this is that the corporation has lost around Rs 2.1 billion in the six months of this fiscal year compared to the same period last year.
Due to the incapability in managing the corporation resulting in losses, the EPF and CIT have been unable to receive the installment amount as per the agreement.
However, due to the adverse impact of COVID-19 on its business, the corporation has appealed to both institutions to extend the duration of repayment by reducing interest rates, fees, and penalties. The corporation has sent letters to both institutions.
If the installment amount cannot be paid, after increasing the interest rate to 9% in Jestha 2074 BS, the loan amount has reached around Rs 20 billion. The installment amount to be received by the citizens’ investment fund initially stood at Rs 400 million, but it has now increased to around Rs 6.3 billion due to the increasing deficit.
Out of Rs 22 billion from the EPF, Rs 10 billion was given at a 12% interest rate in Asar 2070 BS to be repaid within 15 years according to the government’s policy.
Both institutions have been criticizing the failure to repay the installments as per the agreement. At such times, Executive Chairman Yuvaraj Adhikari has issued a statement expressing that good work has been done under the current management.
‘After taking over the management, the corporation has paid Rs 5.36 billion in installments till Chaitra 2080,’ said spokesperson Paudel in the statement issued. He was appointed as the chairman of the corporation in Kartik 2079 BS.
