The Civil Aviation Authority of Nepal (Caan) is preparing to send the preliminary ‘procedural design’ of the proposed regional international airport in Pokhara to China EXIM Bank to acquire financing to build the much-awaited project.

The design contains aircraft operating procedures, details on airspace and runway threshold and the type of aircraft that can land at the airport, among other vital information.

The government signed a $215.96 million soft loan agreement with China in March 2016 for the construction of the new international airport in Pokhara. The proposed site of the airport in the tourist and commercial hub of the western region is located at Chinnedanda, 3 km east of Pokhara’s existing domestic airport.

According to Pradeep Adhikari, chief of the project, the lender China EXIM Bank has asked for a preliminary ‘procedural design’ of the proposed airport to make the loan effective. “We will send the procedural design next Monday.”

The procedural design of the airport is one of the prerequisites to make the loan effective. Other documents that need to be submitted to acquire the credit are copies of the loan, contract, subsidiary loan and land acquisition agreements. “We have completed all the paperwork from our side,” he said, adding that construction would begin the day after the loan becomes effective. “The ball is now in the Chinese bank’s court.”

After the loan becomes effective, the project developer will be able to acquire 15 percent of the total project cost in advance.

According to Caan officials, the project is running late and someone should deal with the problem or make a decision. “The project can’t be kept in limbo.” The bank should either permit Caan to mobilise funds on its own to be reimbursed later or approve the loan. “But there should be no delay,” they added. China CAMC Engineering was given the construction contract in May 2014. The soft loan deal was signed during the then prime minister KP Sharma Oli’s visit to Beijing in March 2016.

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 Ministry of Finance, which signed the credit agreement with the Chinese bank, has agreed to provide the loan to Caan at 5 percent interest per annum. The government will bear the foreign exchange risk, a potential risk that may arise from fluctuations in foreign exchange rates.