Chinese aircraft procurement: PAC launches investigation

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KATHMANDU, APR 09 – With the Parliamentary Public Accounts Committee (PAC) opening a formal investigation into the procurement process of Chinese-made aircraft, the Nepal Airlines Corporation (NAC) on Wednesday submitted all related documents to the Tourism Ministry, to be handed over to the panel.

NAC Spokesperson Ram Hari Sharma said that they had dispatched all the related documents to the ministry as directed by the PAC.

The PAC probe follows the January 26 decision of the NAC board which had written the Tourism Ministry that the Chinese-gifted aircraft have become financially unviable to fly due to the aircraft’s poor performance, untimely delivery and high cost of spare parts, among others.

Under-secretary at the PAC Surendra Aryal said the panel would convene a meeting on the Chinese aircraft procurement process in a few weeks.

The NAC had signed a commercial agreement with Avic, a Chinese government undertaking, in November 2012 to procure six aircraft–four Y-12e and two MA60.

While the NAC have already received an MA60 and a Y12e as gift from China, the four remaining aircraft are estimated to cost $35 million for a combined package including spare parts and pilot training. The government is planning for a soft loan from China Exim Bank to finance the project.

The first of 58-seater MA60s arrived in Kathmandu on April 27, 2014 and was put into service in July 2014. But the national flag carrier has been forced to halt services intermittently due to various technical problems on the aircraft.

The Y-12e, delivered in November last year, was found to be unsuitable for the mountain regions as the plane manufacturers claim. The aircraft speciation does not allow it to land on remote airports as it can only fly to airports with a maximum grade of up to 2 percent or about 1.2 degrees of slope. Most of the short take-off and landing (STOL) airfields in Nepal, including Lukla that has an 11-degree slope, are above the regulatory limit.

Apprising its line ministry in writing of the situation, the NAC said that unless the plane supplier rectified the issues by mid-April, it would not take delivery of the four aircraft and renew the insurance of the aircraft currently flying in the Nepali skies.

The NAC has suggested that the two countries form a joint high-level panel to sort out the four issues related to the aircraft–landing and take-off weight or aircraft performance, higher insurance costs, delay in delivery of spare parts and their costs.

Regarding the landing and take-off weight, the national flag carrier said the aircraft is incapable of carrying passengers at full capacity.

The Y12e also has the similar problem. The aircraft has 200kg excessive weight, which has forced the NAC to cut down the number of passengers by at least three individuals. While the delay in delivery of spare parts from China has forced the NAC to ground the aircraft for an extended period, higher costs of spare parts is another cause of concern.