The Civil Aviation Authority of Nepal finally passed a Rs43.67 billion budget for the ongoing fiscal year 2021-22 after nearly half of the fiscal year had passed.

The board of directors of the country's aviation regulator met Sunday night under the chairmanship of Tourism Minister Prem Bahadur Ale and approved the financial plan for the current fiscal year which ends mid-July, according to Deo Chandra Lal Karn, spokesperson for the Civil Aviation Authority of Nepal.

“After the board members sign the draft minutes of the meeting, the budget will be sent to the respective departments for execution,” he said.

The delay in the passage of the budget could set back infrastructure development in the country’s civil aviation sector, as funds that need to be spent on projects will be held up, officials at the authority said.

They said Minister Ale also pressed them to set aside Rs1 billion to acquire land for upgrading Dhangadhi airport to an international airport after several rounds of discussions, even though it goes against regulations.

Normally, the government manages the finances to acquire land for any project; and after the resource is guaranteed, the project is included in the government’s plan and policy. Agencies like the Civil Aviation Authority of Nepal then prepare the budget to implement the plan.

But in this year's budget, the Civil Aviation Authority of Nepal has allocated funds for land acquisition without the government’s approval.

A civil aviation official said that since the process has been violated, the Civil Aviation Authority of Nepal will now request the Finance Ministry for money through the Tourism Ministry.

“After the finance is guaranteed, the Finance Ministry will table the proposal at the Cabinet for its in-principle approval.”

According to spokesperson Karna, the government is responsible for land acquisition for any project as per current practice.

Out of the authority's total budget of Rs43.67 billion, Rs32 billion has been set aside for capital expenditure, Rs4 billion for recurrent expenditure and the rest for taxes and bonuses.

In the last fiscal year, only Rs16.82 billion or 41 percent of the Rs41 billion budget was spent.

Delays in passing the budget prevent procurement processes from moving forward. Such setbacks have been mainly responsible for hindering budget execution. When announcements for tenders are made early, it speeds up project implementation.

A late annual financial plan also prevents government entities from initiating procurement processes at the start of the fiscal year and making systematic cash release plans.

“This year, as the government plans to complete two international airport projects in Bhairahawa and Pokhara, capital expenditure may rise slightly. But we doubt any new project will be launched at this point in the fiscal year,” said an official at the authority’s finance department.

The authority has allocated Rs10 billion for Pokhara International Airport and Rs3.5 billion for Gautam Buddha International Airport. Both these projects are in the final phase of completion, and are expected to come into operation by this fiscal year.

The budget has allocated Rs11 billion for the construction of international parking bays on the northern side of the runway at Tribhuvan International Airport (TIA) in Kathmandu. The project also includes the construction of a parallel taxiway on the southern side of the runway and a hangar on the eastern side of the runway.

The budget has set aside Rs600 million for the construction of a state-of-the-art international terminal (T2) building at Gautam Buddha International Airport in Bhairahawa.

The terminal currently being built has been deemed too small for an international terminal, and it will be repurposed for domestic flights. The 15,000-square-metre building, which is almost ready, has only six parking bays and lacks an aerobridge.

Officials at the civil aviation authority have blamed their board chairman and tourism minister for delaying passing the annual budget which, they say, will hit capital expenditure.

The first meeting to discuss the budget was held on October 26 after Ale was appointed tourism minister on October 8. The second meeting, probably to finalise the budget, had been planned for October 29.

Sources privy to the matter said Minister Ale wanted to divert some budgetary funds from the budget to Dhangadhi in his home province and Doti which is his election constituency that led to the passage of the budget being held back.

As per the civil aviation budget statement, Minister Ale diverted funds to upgrade the existing airports and acquire land and conduct studies for at least 10 new airports in Dhangadhi and Doti.

The budget statement shows that Rs1 billion has been allocated to acquire 250 bighas of land to lengthen the runway of Dhangadhi to 2,500 metres from the current 1,800 metres. At the same time, Rs180 million has been earmarked for the upgradation of Doti airport.

The Civil Aviation Authority of Nepal has proposed an enlarged annual budget of Rs43.67 billion for this fiscal year 2021-22 betting on a rebound in the travel market and increased revenues as the vaccination drive picks up pace.

The civil aviation body’s revenue has also seen sharp declines.

In the fiscal year 2018-19, the Civil Aviation Authority of Nepal earned revenues totalling Rs9 billion. In 2019-20, income plunged to Rs7.31 billion.

The airport had anticipated revenues to climb to Rs10.50 billion in 2019-20 following the launch of the Visit Nepal 2020 promotional campaign and resultant higher passenger traffic.

But Covid-19 came and disaster followed.

In 2020-21, the coronavirus situation went from bad to worse. Consequently, the authority had made a downward revision of its projected revenue to a rock bottom Rs2.67 billion. But it succeeded in collecting Rs2.95 billion.

The largest portion of the authority’s income comes from passenger fees and landing and parking charges for aeroplanes. Airport development tax, passenger service charge, and parking and navigation charges account for the major earnings of the airport.