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PAC probe deepens into A330 aircraft purchase deal

The parliamentary Public Accounts Committee (PAC) has decided to open an in-depth investigation into the procurement of two long-range Airbus A330 jets PAC probe deepens into A330 aircraft purchase deal

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Sangam Prasain

Published at : November 26, 2018

Updated at : November 26, 2018 17:42

Kathmandu

The parliamentary Public Accounts Committee (PAC) has decided to open an in-depth investigation into the procurement of two long-range Airbus A330 jets, suspecting that the deal may be “lopsided” and “unusual” if the conflicting statements of the Office of the Auditor General and the Tourism Ministry are taken into account.

After four hours of questioning the officials concerned, the PAC meeting concluded that there were two separate conflicting claims: Tourism ministry claimed the jet purchase deal was transparent as all due process has been followed, while the audit report of Auditor General claim that Nepal Airlines Corporation (NAC) breached its own financial bylaw during the procurement.

The NAC purchased two A330-200 Airbus aircraft from the US-based AAR Corp for $209.6 million, the largest ever aircraft purchase deal in Nepal’s aviation history.

First of the two wide-body aircraft—Annapurna—arrived at the Tribhuvan International Airport in the last week of June in 2018. The second named, Makalu, arrived a month later, in the last week of July.

What led the lawmakers to suspect the deal?

It’s because the national flag carrier ordered planes that had clocked not more than 1,000 hours of flight yet received brand new jets.

Auditor General Tankamani Sharma had told the PAC meeting last September that the NAC was required to invite proposals only from aircraft manufacturers to purchase brand new aircraft as per Clause 236 (1) of its financial bylaw.

However, it went with Clause 236 (2) of the bylaw which allows the NAC to procure an old plane. As per Clause 236 (2), the carrier could get a supply of aircraft from a leasing agency, banker or airline operator besides manufacturers.

In the proposal request, the NAC allowed bidders to supply Airbus aircraft having flown not more than 1,000 hours. This enabled the US-based AAR Corp to participate in the bidding process. “Our question is why the procedure for purchasing an old aircraft was adopted if it had to purchase a brand new aircraft,” Sharma had told the meeting.

He added that the top NAC officials involved in aircraft procurement failed to convince his office with their reasons behind adopting the procedure for buying an old aircraft while it had to buy a new one.

Bharat Shah, chairman of the PAC, said on Sunday that they would go deeper into the investigation. “We will investigate whether the national flag carrier has followed the due process and also look if the financial aspect of the deal was transparent or not.”

Most of the lawmakers on Sunday asked the PAC to take immediate action against the parties involved as they suspect “massive” financial irregularities of more than Rs6 billion in the deal. Shah, however, said that there was no proof that substantiates the irregularities.

“We cannot draw a conclusion without first obtaining the facts. But we are treating this case ‘with total suspicion’ as it involves public interest.”

Lawmaker Surya Pathak said that the Tourism Ministry has given an opposing view against the audit report of Auditor General. “Who is transparent? We need more details on this deal,” he said.

Another lawmaker Lekh Raj Bhatta said that conflicting views of the constitutional body and the ministry has given enough room to suspect that the deal is not transparent at all. “Based on the two

opposing views, we can draw a conclusion that one is definitely prejudiced.”

Sangam Prasain
Sangam Prasain is Business Editor at The Kathmandu Post, covering tourism, agriculture, mountaineering, aviation, infrastructure and other economic affairs. He joined The Kathmandu Post in October 2009.