Nepal Airlines recommended to sell Chinese planes for scrap

Nepal Airlines Corporation, trading as Nepal Airlines, is asking NPR220m Nepalese rupees (US$1.65m) for five Chinese-manufactured aircraft that have sat unused at Kathmandu's Tribhuvan International Airport since mid-2020. According to The Kathmandu Post, an independent assessor, US-based Aviation Asset Management Inc., arrived at the scrap value price after being commissioned to appraise the planes earlier this year. The recommendation to sell the two 56-passenger MA-60s and three Y12s for scrap follows several failed campaigns by NAC to offload them. The recommendation, which cost the state-owned NAC USD20,000 to commission, has reportedly left the airline and government in a quandary. The airline is keen to dispose of the aircraft but reluctant to do so at such a low price, given the Chinese government, via the EXIM Bank of China, provided a NPR3.72b (US$27.9m) soft loan plus a NPR2.94b (US$22.1m) grant to buy the planes. Nepal's Ministry of Finance took out the loan in November 2012. It came with a seven-year holiday on interest and principal repayments. However, the holiday is now over. In addition to principal repayments, the ministry is now paying interest of 1.5% p.a. on the outstanding amount plus an annual service and management fee comprising 0.4% of the outstanding amount. In turn, the ministry is charging NAC interest of 1.75% on the outstanding amount. But neither the airline nor the ministry are believed to have made any interest or principal repayments, and the EXIM Bank has begun compounding interest. In addition, NAC is racking up parking fees at the airport.<br/>