After months of research, a parliamentary subcommittee has found that around 14 billion Nepali Rupees (NRs) were embezzled during the building of the Pokhara International Airport, which was financed by China.
In its final report, the House of Representatives Public Accounts Committee (PAC) subcommittee’s inquiry verified corruption and anomalies in the airport’s development.
A key player in the Pokhara airport project was China CAMC Engineering, the construction branch of the state-owned corporation Sinomach. The airport itself was packed with Chinese-made industrial and security equipment, and it imported construction materials and machines from China. notwithstanding China’s assertions on the project’s calibre.
The 12-member committee, which completed the draft report over ten months after it was established, discovered corruption and irregularities in the construction industry in addition to taxes that the construction businesses were excused from paying.
Rajendra Lingden, the head of the Rastriya Prajatantra Party (RPP), served as the subpanel’s leader. The inconsistencies have been categorised by the subpanel under eleven distinct subtopics and sent to legislators for further research.
Since the report is not yet public, one of the subpanel members informed ANI, “In the investigation we have found irregularities which worth to about NRs 14 Billion in the current exchange rate of the US Dollars.”
Additionally, at the time of our research, the Finance Ministry did not provide all of the necessary papers. Even though the numbers may seem excessive, we are certain that one of the biggest corruption scandals in Nepali history is the building of Pokhara International Airport’, the member said. The initial estimate for the construction of the Pokhara International Airport, sometimes known as the “White Elephant,” was NRs 14 billion; however, the final cost was NRs 22 billion.
Since only Chinese chartered aircraft land at the so-called International Airport and other aircraft fly in and out, the quality of the building materials utilised has long been questioned.
The subpanel also proposed that since the runway’s elevation needed to be raised, the soil at the construction site was unsuitable for building the airport. The analysis discovered that no material was delivered from outside, despite the fact that about USD 5.5 million was paid to cover the expense of moving the soil and pebbles from a minimum of 5 km away to the site.
According to the agreement, the runway’s height must also be between 2,677 and 2,674 feet above sea level. To achieve the desired height, the sand and stones had to be filled. According to the research, the runway was constructed in violation of the agreement at 2,636 feet above sea level.
According to the agreement with the Chinese business that was given the contract to build the airport, they have to make all the preparations required to build and run the airport. However, a private company was chosen by the Civil Aviation Authority of Nepal (CAAN) to flatten a slope that might endanger the planes. According to the report, CAAN spent 320 million Nepali rupees on the project.
Similarly, the Chinese contractor is in charge of installing all of the airport’s air conditioners, but the CAAN had to pay an additional USD 7,42,659 to install the HVAC system. Ten million six hundred and forty-eight thousand USD was given to the Chinese constructor to build drainage beside the runway, taxi-bay and apron. However, the subpanel discovered that the payment was made without any work being completed.
In a similar vein, it was discovered that the Chinese contractor received USD 4.435 million without actually pressing the dirt to level the runway, taxiway, and drainage. Another startling finding by the subpanel is that the Chinese builder received USD 5.5 without bringing in dirt from outside sources.
The subpanel also discovered that “despite the contract agreement explicitly stating that the construction company would pay the taxes, the company was granted a tax exemption worth NRs. 2.2 billion.”
The subpanel came to the conclusion that the Nepalese Civil Aviation Authority, which was in charge of the construction, was directly responsible for the irregularities and corruption. The study has called for more inquiry and the immediate suspension of the authority’s director general, Pradeep Adhikari. The project was led by Adhikari from 2014 to 2017.
Additionally, the Lingden-led panel has suggested looking into the past director generals of the authority, Rajan Pokharel and Sanjeev Gautam. Additionally, it has said that after their suspension, Baburam Poudel, the director at the authority, and Binesh Munakarmi, the project manager, also need an investigation.
Additionally, it has said that an investigation of the national pride projects’ directors, Chandmala Shrestha and Prabin Neupane, as well as its administrative head, Rajendra Prasad Poudel, is necessary.
With the exception of sometimes appearing chartered Chinese planes, Pokhara International Airport has not seen any regular international flights since it opened earlier this year. The Pokhara International Airport, which has been dubbed a dream come true for the people of Pokhara, Nepal’s tourist destination, has been said to be a part of China’s ambitious plans, in line with President Xi Jinping’s signature infrastructure initiative, the Belt and Road Initiative (BRI).
The Nepali government denied the Chinese ambassador’s assertion that the airport was a part of the Belt and Road Initiative (BRI) only days before the airport’s official opening. The Pokhara airport, which disproportionately benefited Chinese companies at the expense of the borrowing country, served as an example shortly after the handover of the dangers associated with adopting China’s infrastructure-at-any-cost growth model.
A careful review of thousands of papers and interviews with many project participants revealed that China CAMC Engineering had continuously set conditions to safeguard its interests and increase profits. It also methodically destroyed Nepali supervision at the same time. As a result, Nepal was unable to pay back its substantial debt to Chinese creditors since it did not get the anticipated flood of passengers.
Even before an official bidding process began, in 2011, the Himalayan Nation’s Finance Ministry signed a memorandum of understanding in favour of CAMC’s plan. Only Chinese companies were permitted to compete on the project under the terms of the Chinese credit deal.
At first, CAMC offered USD 305 million, which was almost twice as much as Nepal had estimated the airport would cost. Politicians in Nepal criticised this, claiming that the price was exaggerated and the process was manipulated. In response to the outrage, CAMC reduced the price by almost 30% by lowering their proposal to USD 216 million.
A 20-year contract between China and Nepal was formally signed in 2016, and a fifth of the project’s finance came from interest-free loans. With payments starting in 2026, Nepal planned to borrow the remaining amount from China’s Export-Import Bank at a 2% interest rate.
As building went on, obvious problems surfaced. The Chinese contractor was overseen by the Civil Aviation Authority of Nepal, however the project was hindered by a lack of skilled staff and insufficient funding for consultants.
Funds were diverted elsewhere when the initial USD 2.8 million budget for employing experts to guarantee CAMC’s adherence to international building standards was subsequently lowered to only USD 10,000.
Due to a lack of supervision, CAMC was able to start building before experts were hired and complete work that did not adhere to international standards. The runway’s future stability is at risk since important elements were left out, such soil density testing for the runway’s foundation.
The design of the airport’s drainage system was another mistake that increased the danger of floods by disregarding past rainfall data and sloping terrain. Insufficient documentation of the identities of suppliers and the quality of Chinese-made construction supplies violated the conditions of CAMC’s agreement with Nepal.
Although CAMC’s work was supposed to be supervised by consulting efforts, the Chinese business was able to avoid experts and communicate directly with Nepali authorities who lacked building knowledge. Any attempts to locate further data or supporting documents were often unsuccessful.
China IPPR International Engineering, a consulting company, was hired by China’s Export-Import Bank to guarantee the project’s quality, safety, and timeline as well as to verify Nepal’s satisfaction with CAMC’s work.
But when CAMC purchased IPPR in 2019, changing it from a sister firm to a direct subsidiary, things became more hazy. As part of its financing from the Chinese bank, IPPR received fees from Nepal.
In addition, there were claims that records pertaining to the credentials of IPPR employees in Pokhara had been fabricated. Even employee credentials were falsified in some instances. Such actions demonstrated a troubling disrespect for accountability and openness.
Nepal’s hopes for the airport were jeopardised when Pokhara airport failed to get international flights, particularly from Indian carriers. The biggest airline in Nepal, Buddha Air, has applied for licenses to fly to India but was awaiting Indian government clearance. Although no foreign flights have started as of yet, a feasibility assessment commissioned by CAMC had predicted passenger counts that would allow the airport to pay back its financing from earnings.
During Prime Minister Pushpa Kamal Dahal’s visit to Beijing in late September 2023, Nepali authorities allegedly asked China to turn the loan into a grant because of the airport’s financial difficulties. During the visit, China and Nepal released a joint statement acknowledging the construction and functioning of the Pokhara airport, but it included no information about intentions to forgive the debt.
The Pokhara airport is a clear illustration of the dangers of adopting China’s infrastructure development model, raising issues with transparency and financial sustainability while escalating regional geopolitical tensions.
