“We have seized all the documents and started an investigation,” said Shreedhar Sapkota, spokesperson at the CIAA. He refused to give more details as a probe was underway.

Sources at the anti-graft body said that they suspected misconduct in the tendering process.

The bidding process for the airport had been put on hold since July 2012 after the lowest bidder China CAMC Engineering Co quoted a price of US$ 305 million, which is 85 percent higher than the government-estimated cost. The project was expected to cost US$ 166 million.

On Feb 9, 2012, the Civil Aviation Authority of Nepal (Caan) had invited bids to build the airport under the Engineering Procurement and Construction model. However, it was forced to extend the deadline twice due to intervention by the CIAA.

On July 18, 2012, Caan’s tender evaluation committee had opened the financial proposals for the project. Subsequently, the project was dragged into controversy with Caan unions opposing the deal, arguing it was not economically viable under the authority’s existing financial status.

The government had previously signed a memorandum of understanding with China CAMC on Sept 20, 2011, but the deal was made behind closed doors. The agreement, which was later cancelled, had been signed by the then finance minister Barsha Man Pun on behalf of the Nepal government.

Subsequently, in January 2013, China CAMC wrote to Caan expressing its willingness to build the project at the government-estimated cost.

Things became more complicated after China Airport Construction Company, a consultant appointed by China CAMC, submitted another study report to Caan which quoted an estimated price of US$ 264 million (excluding 16 percent price escalation cost and 13 percent VAT).

After including the price escalation cost as per the study, the estimated outlay would come to around US$ 300 million, nearly equal to the original cost quoted by China CAMC.

So a three-member independent panel was formed to calculate the cost again, and it came up with the figure of US$ 220. Tourism Ministry officials said that a project proposal with the latest estimated cost was sent to the Cabinet which put it in deep freeze. Recently, newly-appointed Finance Minister Ram Sharan Mahat had said that the cost estimate of the proposed regional international airport in Pokhara was “unrealistic”, and told the concerned ministry to proceed with the project by calculating a reasonable outlay.

Mahat said that the scheme’s estimated cost was “outrageous” compared to the regional international airport being constructed in Bhairahawa.

The government had planned

to borrow around US$ 145 million in soft loans from the Export-Import Bank of China to fund the project.

A detailed study for the airport project, conducted by the government in association with the Japan International Cooperation Agency in 1989, had proposed a 2,500 m long and 50 m wide runway, a terminal and a cargo building. The construction of the airport, expected to be completed in four years, was estimated to cost US$ 39.6 million at that time.

The project has been in limbo since 1975 when the government acquired more than 3,106 ropanis of land to build it. The government has earmarked Rs 1 billion for additional land acquisition. A fresh study has shown that another 500 ropanis will be required for the project.