Nepal Airlines Corporation (NAC) has finally agreed to take delivery of the four Chinese aircraft on order after putting it off due to issues with early models, but the carrier has placed five key conditions to do so.

Among the conditions, the national flag carrier has demanded that AVIC International Holding Corporation, the supplier of the problem-plagued MA60 and Y12e, guarantee compensation for losses incurred while flying the planes in Nepal with a load penalty.

The 56-seater MA60, which Nepal had received as a gift from China, arrived in Kathmandu on April 27, 2014, and has been operating with a load restriction on the Nepalgunj, Biratnagar, Bhairahawa, Chandragadhi and Pokhara sectors. Another Chinese-gifted aircraft, the 17-seater Y12e, landed in Kathmandu on November 3, 2014. It can be used to serve remote airfields like Lukla, Jomsom, Manang, Simikot, Rara, Jumla and Dolpa with a load restriction.

The Tourism Ministry submitted the proposal with NAC’s conditions to the Cabinet on Wednesday for its go-ahead to continue with the aircraft procurement process. The government plans to conclude the purchase before Prime Minister KP Sharma Oli’s planned visit to China next fortnight.

A government fact-finding committee had found that the MA60’s utilization was very poor in Nepal. NAC had been operating only eight weekly flights with the plane.

The Y12e has been grounded for the last two months due to a shortage of pilots. It has still not been cleared for mountain airfields due to regulatory restrictions.

The second condition put forth by NAC is assurance of spare parts and maintenance support for 10 years. The government committee had earlier reported that the commercial agreement signed between NAC and AVIC did not address the long-term maintenance and training and engineering service support required for the sustainable operation of the aircraft.

The committee has recommended that AVIC set up a bonded warehouse to make spare parts easily available in Nepal. NAC’s third condition is that the crew training costs be reduced to the same level as that for the Twin Otter and ATR aircraft that have been operating in Nepal. Government officials said that the supplier had agreed to cut the pilot training costs. The company will train Nepali pilots for a fee of $19,000, down from the $80,000 set earlier for a combined training package.

NAC’s fourth condition is that insurance premiums should be the same as for other aircraft flying in Nepal as high insurance premiums for the Chinese planes have also been a matter of concern. The corporation’s final condition is that English-speaking pilots and engineers should be made available and that the aircraft manual should also be produced in English.

“NAC’s opinion is clear. As it is a business entity and has to think about commercial viability, it is justifiable to place such demands for sustainable operation of the aircraft,” said a high-level government official.

The aircraft procurement process had been put on hold for the last one year after NAC reported many problems with them.

On November 14, 2013, the Cabinet had given the go-ahead for the government to sign loan and grant agreements with China to procure six aircraft for the national flag carrier. Although there was no need to send the proposal to the Cabinet again, newly-appointed Tourism Secretary Prem Rai, who also chairs the NAC board, refused to be involved in the controversial deal, said the official. “The issue has been left to be resolved at the ‘political level’ so it has been resent to the Cabinet.”