$216m loan agreed

  • China EXIM Bank to provide 25 percent of the loan without interest
- Sangam Prasain, Kathmandu
pokhara int’l airport loan negotiations

Jan 5, 2016-The government has concluded negotiations with China EXIM Bank for a $215.96 million loan to build a new regional international airport in Pokhara.The bank has pledged to finance the construction of the proposed airport in the tourist and commercial hub, and also agreed to provide 25 percent of the loan without interest, said Madhu Marasini, chief of the international cooperation coordination division at the Finance Ministry. The government will have to pay interest on the rest of the loan at the rate of 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. A formal loan agreement will be signed after the deal is okayed by the Cabinet, said Marasini.According to Tourism Ministry officials, a high-level government team led by Finance Minister Bishnu Poudel is scheduled to leave for China on January 14 to take part in the formal inauguration of the Asian Infrastructure Investment Bank (AIIB), a multilateral development bank, when the credit accord is likely to be signed. Meanwhile, more than 80 percent of the land owners whose property has been taken over for the airport have received compensation payment. The proposed site at Chinnedanda lies 3 km to the east of Pokhara’s existing domestic airport.

The project has acquired another 629 ropanis of privately and publically owned land for the airport. In 1975, the government had taken over 3,106 ropanis of land for the project. It moved to acquire extra land after a new study showed that the proposed airport would require more space.

Last November, the Finance Ministry had formally requested the bank for a soft loan. The credit request followed the Cabinet’s go-ahead on October 27, 2014 to proceed with the much-delayed project with Chinese funding. The airport project has been in the works for 40 years.

On May 22, the Civil Aviation Authority of Nepal (Caan) awarded the construction contract to China CAMC Engineering. The airport will be built under the engineering procurement and construction (EPC) model. The EPC contract binds the contractor to deliver the project at the stipulated time and at the predetermined price regardless of any possible cost overruns.

Caan had invited bids for the project on February 9, 2012. As per the feasibility report, the airport will accommodate medium category jets like the Boeing 757 and the Airbus 320.

Published: 05-01-2016 09:00

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