The ministry had asked the Chinese bank for funding last November after the Cabinet gave the go-ahead to construct the much-delayed project on October 27. The proposed airport will be built at Chinnedanda, 3 km east of the existing domestic airport in the lakeside city.

“China Exim Bank has acknowledged our loan request and asked to begin negotiations on the terms and conditions,” said Madhu Marasini, chief

of the international cooperation coordination division at

the ministry.

The two sides will discuss the terms and conditions related to the interest rate and commitment charge, among other issues.

“We will at least try to ensure that the interest rate will not be higher than what the Chinese bank has been charging earlier,” said Marasini. The government usually does not accept an interest rate of more than 2 percent for loans from Exim Bank.

The ministry has approached the bank for a loan to build the airport on two previous occasions. The first time it had asked for $145 million when the project was estimated to cost $166 million. However, the projected outlay was revised after the short listed bidder China CAMC Engineering Co quoted a price of $305 million. So the ministry had requested to borrow $278 million the second time.

The airport project was held up due to the cost variation. Nothing had been done since July 2012 after the lowest bidder China CAMC quoted a price of $305 million, 85 percent higher than the original estimate.

Finally, an independent cost evaluation panel led by a former registrar of the Supreme Court estimated a price tag of $215.96 million. The ministry then presented the proposal with the latest estimate to the Cabinet, but the Khil Raj Regmi-led government put it on the backburner.

The project was revived by former tourism minister Bhim Acharya of the Sushil Koirala-led government. On April 7, a board meeting of the Civil Aviation Authority of Nepal (Caan) chaired by Acharya approved the project with a revised cost of $215.96 million. Caan subsequently awarded the construction contract to China CAMC.

However, the project hit another roadblock after the ministry questioned its estimated cost calling it “unrealistic”. Last June, the Finance Ministry asked the Tourism Ministry to explain the project’s cost after it requested funding immediately after awarding the contract to the Chinese company.

The Finance Ministry was convinced after a high-level panel formed by the government and consisting of experts from the Institute of Engineering, Pulchok showed that the project would cost more than $216 million. Caan had invited bids for the project on February 9, 2012.

The project will be built under the engineering procurement and construction (EPC) model.