Print Edition - 2017-03-20 | MONEY
Cabinet asked to act as guarantor
Mar 20, 2017-
The Tourism Ministry is preparing to ask the Cabinet to act as a loan guarantor for Nepal Airlines Corporation (NAC) as the potential lender Employees Provident Fund (EPF) is not satisfied with the Finance Ministry as a surety.
The national flag carrier plans to borrow Rs25 billion to procure two wide body Airbus A330-200 aircraft to boost its international fleet.
NAC has already borrowed Rs10 billion from the EPF to buy two Airbus A320 jets, and the Cabinet had acted as the surety. “This time too the lender wants the Cabinet to be the guarantor,” said Buddhi Sagar Lamichhane, joint secretary at the Tourism Ministry. “In accordance with its request, we are planning to submit a proposal to the Council of Ministers.” He added that if the process is delayed, the delivery date of the two Airbus A330 wide body jets will be pushed back and their prices may rise too.
The EPF has sent a letter of intent to NAC to finance the project. According to NAC officials, the lender is likely to provide the loan at an interest rate of 9 percent per annum. However, negotiations on the interest rate are yet to be finalized, they said.
Last Wednesday, NAC concluded ‘contract negotiations’ with US-based AAR Corp which will supply the Airbus A330-200 long range jets, laying the groundwork for signing the final purchase agreement.
During the talks, the two parties agreed to sign the ‘sales and purchase agreement’ by the end of March.
Published: 20-03-2017 09:43