The Civil Aviation Authority of Nepal (Caan) has estimated that the proposed second international airport (SIA) in Nijgadh, Bara can be constructed at a cost of Rs121 billion, excluding the proposed airport city.

Caan engineers have made a preliminary financial estimate of the airport and submitted their report to its board on Thursday. After the board gives its approval, the proposal will be sent to the Cabinet for its go-ahead which will allow Caan to start the construction work.

The planned modern airport in Nijgadh, which is located 175 kilometres south of Kathmandu, will be spread over 80 square kilometres. Caan engineers said it could “probably” be the biggest airport in Asia. In 2011, Korea’s Landmark Worldwide Company (LMW) had submitted a detailed feasibility study of the airport project to the government, and estimated that the airport, which would be built in three phases, would cost Rs82 billion.  

It has estimated a price tag of Rs65 billion for the first phase, Rs7.78 billion for the second phase and Rs8.79 billion for the third phase. The Korean company had assessed that the total investment would come to Rs358 billion by 2046-50. “The LMW study conducted four years ago has not included the cost of resettlement, additional land, lengthened runway and the terminal building,” said Caan officials.

The preliminary internal financial assessment conducted by Caan has proposed building a 4,000-metre runway while LMW’s plan has a 3,600-metre runway. Likewise, Caan has proposed building a 100,000-square-metre international passenger terminal building against the 75,000-square-metre building proposed by LMW.

According to the Korean company’s feasibility study, the airport will be able to handle 15 million passengers annually and accommodate the super-jumbo Airbus A380 after the first phase of construction. Meanwhile, Caan said the airport would be able to handle 20 million passengers annually in the first phase. The new assessment has proposed 25 aprons.

“The project cost is higher than LMW’s estimate due to the longer runway and bigger terminal, and it also includes the cost of resettlement and additional land,” said Caan engineers. The government needs to acquire another 84 bighas of land and cut a large number of trees and bushes. The law requires the project to plant 25 trees elsewhere for every tree it cuts down at the project site. Around 1,400 households will have to be relocated from the site. “All these factors have increased the project cost by Rs16-17 billion, and they were not included in the earlier report.”

“Besides, the estimates produced by Caan and LMW are about similar when taking into account inflation at the rate of 10 percent annually and the appreciation of the US dollar against the Nepali rupee in the last four years,” said officials.  

Based on the passenger volume after the airport comes into operation, a parallel runway and airport city can be built, Caan’s preliminary report said.  

Tourism Minister Aananda Prasad Pokhrel had ordered Caan to conduct a separate financial assessment after the National Planning Commission and Investment Board Nepal hesitated to accept LMW’s report as neither wanted to pay the $3.55 million bill.

LMW’s report had proposed constructing the airport under the “build own operate and transfer” (Boot) model. The SIA had been assigned to Investment Board Nepal with instructions to fast-track it under a single window. However, the project had stalled due to uncertainty about who would execute it and pay for the LMW report.

Things became more complicated after India expressed interest to build the airport. Last July, a delegation from the Airports Authority of India had formally urged the Nepal government to give “preference” to the southern neighbour while developing the proposed SIA.

The team had said that the project needed huge funding, but that it would not be a problem as India’s public and private sectors were ready to invest in the project.

The proposed site of the SIA is close to Nepal’s border with India, and government officials said that it would be more accessible to a large section of the population in Bihar, so India had been expressing interest in building it. The government got into the act and said that it wanted to build the airport by mobilizing its own resources. “As the project will take at least five to six years to be completed, the government can allocate Rs20 billion annually for it,” Tourism Minister Pokhrel had said recently.

Caan officials said the government was convinced about the project, but a national commitment was needed to build it.