Caan staff miss bonuses as payment window expires

  • financial audit

Apr 14, 2018-

Employees of the Civil Aviation Authority of Nepal (Caan) will miss bonuses worth Rs591.3 million as the payment window has expired even as controversy rages over the legality of the bonus scheme, a government audit report unveiled on Thursday said.

The aviation regulator had allocated bonuses from the profits earned in the fiscal years 2011-12 to 2015-16 which had to be distributed within eight months from the close of the fiscal year.

Caan will have to write back the funds set aside for bonus distribution as income, the 55th annual report of the Office of the Auditor General said. However, Caan can submit a proposal to the Labour Office explaining the reasons for not being able to issue the bonuses on time, and get a three-month extension of the payment window if it finds that the causes are genuine.

Caan may also be allowed to distribute two years’ bonuses at a time in the next fiscal year.

Meanwhile, questions have also been raised whether Caan should be allowed to distribute bonuses from the money that has been collected from travellers as tax to develop infrastructure.

Caan currently collects taxes in two separate baskets. The government has authorized Caan to raise Rs1,000 (excluding value added tax) as airport development tax from each passenger which comes to Rs1.80 billion annually.

In addition, Caan collects Rs1,130 as passenger service charge from each international traveller which amounts to Rs1.70 billion a year.

Tourism Ministry officials at that time had pointed to flaws in the Bonus Act which allow public enterprises, established with the objective of serving the public or delivering services, to distribute bonuses from tax money collected from the people. 


As per the records of the Nepal Tourism Board, it has Rs115.1 million lying idle in a private bank in Pokhara since 2014-15. But the bank’s records show only Rs5.2 million. Similarly, the board’s records show a deposit of Rs386.3 million in another bank, but the board has not kept the bank account statement.

Illegal procurement process

The audit said that Nepal Airlines Corporation had violated Financial Bylaws while purchasing two long-range Airbus A330 aircraft. It said that the corporation should have procured new planes through a competitive bidding process from the manufacturer. “But it has procured the aircraft through al easing company or agent, which is against the law,” the report said.

Meanwhile, the report said that the corporation had been operating Chinese-made MA60 aircraft incurring losses of Rs66.7 million annually, while its losses from the Y12e amount to Rs39.4 million. “The corporation does not seem to have made a solid working plan to operate these aircraft at a profit,” the report said.

Although the corporation has targeted flying 9,168 flights in the domestic sector annually, it has been operating 4,538 flights only. The corporation’s expenditure has increased which has resulted in less income, the report said.


The report has found that the compensation determination committee headed by the chief district officer in Rupandehi, Bhairahawa did not follow standard compensation distribution process for land acquisition for the upgradation of Gautam Buddha airport into an international facility.

The airport project had estimated a cost of Rs23 billion to acquire an additional 498 bighas of land. However, the committee provided compensation which was five times the average of the rate fixed by the government, the market rate and the rate fixed by banks if the land is located on the main road and eight times the average if the land is located elsewhere.

“This abnormal rate has increased the compensation burden resulting in cost overruns for the project,” the report said.

Meanwhile, the audit said that Caan failed to recover Rs1.12 billion out of outstanding payments totalling Rs2.60 billion from airlines and other companies. The outstanding amounts had been entered as expenses in the balance sheet. “This amount should be recovered as per the law.”

Similarly, the International Airport Project in Pokhara has not cleared Rs49.9 million in capital gains tax from landowner from whom the project acquired land worth Rs1.83 billion for the government through the Land Revenue Office in Pokhara.


Published: 14-04-2018 08:51

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