Nepal Airlines Corporation (NAC) settled its loan amount of more than Rs 554 million on Tuesday.
The crisis-ridden national flag-carrier paid the portion of its loans to the Employees Provident Fund (EPF) and Citizen Investment Trust (CIT). Of the total amount, the NAC paid Rs 430.09 million to the EPF, out of which Rs 23.20 million was paid in interest. Similarly, the NAC paid Rs 100 million to the CIT.
Earlier at the end of the fiscal year 2022/23, the NAC paid Rs 830.9 million to these government-owned lending institutions. Similarly, the NAC had settled Rs 2.942 billion in mid-April to the EPF and the CIT.
The NAC has been struggling to settle its dues it had taken to procure aircraft. The Corporation has been reeling under poor management and high political intervention. Most of the time, it faces criticism of corruption and embezzlement or financial misappropriation while procuring new aircraft.
Currently, the NAC is in the process to procure three 19-seater aircraft, while the Minister for Culture, Tourism and Civil Aviation, Sudan Kiranti has been pressing the government-owned enterprise with his ambitious plan to purchase 10 new aircraft.
The NAC owes a debt of around Rs 47 billion. Although the Corporation has nominally improved in its revenue generation, it has cleared only around three percent of its loans in the past few years. Paying over 9.5 percent in interest, a significant portion of the Corporation’s earnings from operations goes for servicing loan interest, contributing to the low financial ratios.
Currently, the NAC operates international flights with just four aircraft, serving destinations such as Japan’s Narita, Saudi Arabia’s Riyadh, India’s Delhi, Mumbai, and Bangalore, as well as locations in Malaysia, Qatar, Dubai, Bangkok, and Hong Kong. Out of the NAC’s fleet of 13 aircraft, only six are currently in operation, leaving seven grounded.
A report by the Office of the Auditor General revealed that the NAC’s physical assets were not adequately protected and documented. The constitutional body has also attributed the NAC’s poor financial health to a large number of its assets in stock.
