Letters

Head of Nepal Airlines Corporation responds

Kathmandu

Dec 10, 2018-

This is in reference to a news story entitled (‘Here’s everything you need to know about Nepal Airlines’ Airbus deal’, TKP online, December 7). Connecting my appointment as managing director of Nepal Airlines on May 31, 2015 with the purchase of two wide-body Airbus A330 aircraft, which was purchased after international competitive bidding participated in by 11 companies from six countries, is far-fetched. 

 

The bid was awarded to a consortium of AAR Corporation of USA, German Aviation Capital and HiFly Airlines of Portugal which quoted the lowest price. It is true that the then government added Nepal Airlines to the list of about a dozen public entities where the chief executive is directly appointed by the government. But it makes no sense to tie up this amendment with the purchase agreement signed on April 7, 2017, that is two years after my appointment. 

Nepal Airlines, including myself, had not even heard the name of HiFly before the opening of global bids. Hence, it is a totally false accusation that the request for proposal documents were prepared to favour HiFly Airlines. Moreover, Nepal Airlines never expected that brand new aircraft would be cheaper than second-hand aircraft, especially in a global bid.

It is not at all correct that there were unnecessary delays by Nepal Rastra Bank, the Tourism Ministry, Citizen Investment Trust and Employees Provident Fund. On the contrary, all these institutions did a great job of expediting the usual bureaucratic process, which made timely delivery of the aircraft possible. 

 

I did tell the parliamentary Public Accounts Committee, and I am saying it in all interviews, that Nepal Airlines planned to buy second-hand aircraft, but luckily Nepal Airlines got brand new ones, whose prices were quoted lower than second-hand planes.

Nepal Airlines’s stand is clear that our requirement is any old aircraft with less than 1,000 hours on it, and obviously less than 1,000 hours means the acceptable range is between zero to 1,000 hours. And the Public Procurement Act does does not prohibit opting for goods, services or civil works which are of better quality than stipulated in the tender specification, if the price is competitive.

The establishment of a special purpose company, to be registered in Ireland, was proposed in the company’s original bid document. It was accepted as normal practice in international business dealings and after consultations with three reputed corporate lawyers of Nepal. 

Regarding payments, exchange rates and bank transactions, it is unthinkable that public sector entities like Nepal Airlines, Citizen Investment Trust, Employees Provident Fund and Nepal Rastra Bank will make mistakes, knowingly or unknowingly, in dealings of billions of rupees; and that Nepal Airlines will make payments which differ from those stated in the purchase agreement.

As to the report of the Office of the Auditor General, Nepal Airlines respects the opinion in the report, but opinions may differ from facts. Nepal Airlines’ opinion is that it has not violated the letter and spirit of the Public Procurement Act 2007 and its Financial Rule, resulting in the excellent output of two brand new aircraft at, most probably, the cheapest possible price.

Sugat Ratna Kansakar, Managing Director, Nepal Airlines Corporation

Published: 10-12-2018 16:21

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