Money

NAC secures Rs12b loan from CIT

- Post Report, Kathmandu

Jun 13, 2017-

Nepal Airlines Corporation (NAC) on Monday secured another Rs12 billion loan from the Citizen Investment Trust (CIT), a day after signing a credit deal for Rs12 billion with the Employees Provident Fund (EPF) to buy two wide-body Airbus A330 jets.

NAC Managing Director Sugat Ratna Kansakar and CIT Executive Director Ram Krishna Pokhrel signed the agreement amid a programme in Kathmandu.

The interest rate on both loans has been fixed at 9 percent per annum, and the repayment period is 15 years.

The two lenders will each provide Rs4 billion to NAC as the first installment to cover the advance payment that needs to be made to the aircraft supplier.

As per the sales and purchase agreement signed with the US-based supplier AAR Corp on April 7, the national flag carrier has to pay 35 percent of the total aircraft cost, or Rs8 billion, as pre-delivery order fee.

According to NAC, the pre-delivery order fee will be deposited in an escrow account held by Norton Rose Fulbright in Europe from where the money will be sent to Airbus.

“We are in the process of obtaining foreign exchange clearance from Nepal Rastra Bank,” said Kansakar. “The pre-delivery order fee will be sent within three to four days.”

NAC has signed a $209.6-million contract with AAR Corp to buy two long-range Airbus A330-200, making it the largest ever aircraft purchase deal in Nepal’s aviation history.

The first of the two jets are expected to arrive in Nepal in May and the second one by June in 2018.

“Despite the delays in dispatching the pre-delivery fee, the delivery date of the aircraft will not be pushed back,” said Kansakar.

NAC missed the May 5 payment deadline due to delays in signing the loan agreements.

Earlier, NAC had planned to borrow money from the EPF only. However, the airline company’s board directed the management to obtain credit from the two state-owned lenders in order to spread out its debt.

NAC already owes the EPF Rs10 billion which it borrowed in 2015 to buy two Airbus A320-200 aircraft.

Carrier clears Iran’s dues

Nepal Airlines Corporation (NAC) on Monday cleared around 10,000 euros in outstanding dues to Iran after the country in the Middle East refused to allow the national flag carrier to use its airspace to reach Qatar’s capital Doha.

The payment was settled through an agent in Dubai, as none of the Nepali bank showed interest to remit the money to Iran, said an NAC official. The corporation was forced to cancel its flight on Kathmandu-Doha route on Sunday due to delay in payment of dues.

NAC officials said the issue has been settled and flights to Doha would resume from Monday night. NAC conducts four weekly flights to Doha.

Several Arab nations, including Saudi Arabia, the UAE, Bahrain, Egypt and Yemen, abruptly cut diplomatic ties with Qatar on June 5, amid accusations the tiny but gas-rich state has been supporting terrorism. They have restricted flights to connect Doha through their airspaces.

NAC also has to skip the UAE airspace and fly over Iran to reach Doha.

The corporation had not settled Iran’s outstanding dues since 2007, as the airspace was used on rare occasions, said the officials.

“We were unable to dispatch the payment as Nepali banks refused to make the transfer to banks based in Iran,” they said. Nepal’s private carrier Himalaya Airlines, which also uses Iran’s airspace, also relies on agents based in Dubai to remit payments to Iran.

Published: 13-06-2017 08:32

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