The construction of international airport in Pokhara will formally begin from Thursday, a day after the second phase of the local elections, the project official said.

Pradip Adhikari, chief of the airport project, said that contractor would be mobilised on the project site from Thursday.

Works on quarry identification, equipment shipment and other temporary works would be completed this monsoon. “The full-fledged ground works, however, will begin after the monsoon or from September-end,” he said.  

The government signed a $215.96 million soft loan agreement with China EXIM Bank in March 2016 for the construction of the new airport in Pokhara.

However, the airport project stalled for a year over issues of opening an escrow account. “Now, all issues have been settled. The loan has also become effective.”

Adhikari said that China EXIM Bank and Nepal has to sign a separate escrow account agreement and it can be done anytime.

Construction was delayed after the bank set a condition that a joint escrow account should be set up into which the Civil Aviation Authority of Nepal (Caan), the project executing agency, should deposit the income generated from all its airports.

Caan refused to do so which delayed the release of the project funds, and construction of the airport stalled.

However, on April 21, the bank issued a letter stating that its earlier condition regarding the escrow account had been amended, which paved the way for the government to begin the project construction.

As per the amended provision, only revenues generated by Pokhara International Airport will be put into the account.

The proposed airport in the tourist and commercial hub of Pokhara lies at Chinnedanda, 3 km to the east of the existing domestic airport.

The soft loan pact was signed during the then prime minister KP Sharma Oli’s visit to Beijing in March last year.

As per the agreement, the government will receive the loan from China EXIM Bank, 25 percent of which will be interest-free.

The interest on the rest of the loan has been fixed at 2 percent per annum. The loan repayment period has been fixed at 20 years, including a grace period of seven years when no interest will be charged.

The government will bear the foreign exchange risk, a potential risk that may arise from fluctuations in foreign exchange rates.

China CAMC Engineering won the construction contract in May 2014. As per the feasibility report, the airport’s runway will be 2,500 metres long and 45 metres wide.

It will accommodate medium category jets like the Boeing 757 and the Airbus 320.

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

Under the EPC contract, a single contractor takes responsibility for all components like design, engineering, construction and procurement.

The contract binds the contractor to deliver the project at the stipulated time and at the predetermined price regardless of any possible cost overruns.

The government plans to complete the project by July 2020.