The Civil Aviation Authority of Nepal (Caan) has allocated Rs151 million from its profits in the last fiscal year to distribute out in bonuses to its employees despite public uproar against similar decisions in the past.

According to Caan sources, the aviation regulator has been setting aside a portion of its profits for bonus payments for the last seven fiscal years from 2011-12 to 2017-18 which has accumulated to Rs899 million, but it has not made any payments fearing criticism.

Following the Caan board’s go-ahead, the management sent the bonus proposal to the Tourism Ministry to obtain permission from the Finance Ministry to distribute the money. The Tourism Ministry said that Caan had been taking loans from the government and various agencies to implement its projects, so it is not authorized to distribute bonuses, said a ministry official. Caan has paid Rs1.63 billion in dividends to the Finance Ministry from its profits.

In the last fiscal year, the 55th annual report of the Office of the Auditor General said that Caan was not allowed to distribute bonuses worth Rs591.3 million for up to the fiscal year 2015-16 as the payment window had expired.

The report said that Caan would have to write back the funds set aside for bonuses as income. 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.

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.

Last year, controversy had raged over the legality of the bonus scheme. The Commission for the Investigation of Abuse of Authority (CIAA) had also formally launched an investigation into Caan’s decision to distribute bonuses to its employees from money collected from passengers to develop airport infrastructure. The bonus announcement has also come at the time when the efficiency of Nepal’s aviation infrastructure and manpower has been widely questioned at national and international levels due to the lack of investment and training facilities.

Although the Bonus Act 1974 paves the way for organisations like Caan to distribute bonuses from their profits, the Bonus Regulation 1983 forbids not-for-profit government-owned entities established to promote administrative, industrial, agriculture and other sectors from issuing bonuses. “Caan was set up with the objective of ensuring safety, security and efficiency in the aviation sector. Hence, it has no right to distribute bonuses,” said a Tourism Ministry official.

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.