A Caan board meeting, chaired by Tourism and Civil Aviation Minister Bhim Acharya, approved the project under the revised cost of $216 million recommended by the three-member independent panel formed by the government.

“We have approved the project under the revised cost,” said Acharya. “Now, we will be holding discussion with the lowest bidder China CAMC Engineering Co as they have informally agreed to construct the project at the government’s revised cost.”

The Commission for Investigation of Abuse of Authority (CIAA) had seized the documents related to the tender process of the proposed airport suspecting financial irregularities. The investigation has been put on hold at present.

Acharya said the Finance Ministry will sign a loan agreement with the China EXIM Bank soon after the project is awarded to the Chinese company.

Under the Engineering Procurement and Construction (EPC) model, the government plans to borrow $145 million in soft loan from the bank to build the airport.

The EPC only allows participation of Chinese companies or Chinese-Nepali joint ventures. On February 9, 2012, Caan had invited bids for the project construction.

The much-touted airport project has been on hold since July 2012 after the lowest bidder China CAMC quoted $ 305 million, which was 85 percent higher than the government-estimated cost. The government had expected the project to cost around $ 166 million.

Subsequently in January 2013, China CAMC wrote to the Civil Aviation Ministry expressing its willingness to build the project at the government-estimated cost.

Things became more complicated after China Airport Construction Company, a consultant appointed by China CAMC, submitted another study report to Caan quoting an estimated price of $ 264 million. Add 16 percent price escalation and 13 percent VAT, the estimated outlay would come around $ 300 million—nearly equal to the original cost quoted by China CAMC.

Another three-member independent cost evaluation panel recommended $ 216 million. The ministry then tabled the proposal with the latest estimated cost at the Cabinet, but the Khil Raj Regmi-led government put the project on the backburner.

“Our estimate suggested the revised cost was reasonable as the Chinese company had revised the airport designs like constructing the concrete runway, among others,” Acharya said. Of the total revised amount, $50 million has been kept as inflationary price or escalation cost.

Lawmaker Rabindra Adhikari said Prime Minister Sushil Koirala was also positive on the project which has been in limbo since 1975. The government had acquired more than 3,106 ropanis of land for the purpose at the time. The government has earmarked Rs 1 billion this fiscal for additional land acquisition after a fresh study suggested  another 500 ropanis would be required for the project.