Nepal Airlines flouted own laws, says Auditor generalAuditor General Tankamani Sharma said on Friday that the Nepal Airlines Corporation had breached its own financial bylaw while procuring two wide-body aircraft.
Auditor General Tankamani Sharma said on Friday that the Nepal Airlines Corporation had breached its own financial bylaw while procuring two wide-body aircraft.
Sharma made the remarks at a meeting of the Parliamentary Public Accounts Committee (PAC) where lawmakers sought the opinion of the Office of Auditor General (OAG) over the alleged irregularities in the wide-body plane procurement process.
According to Sharma, the corporation had prepared a request for proposal to select the company which could supply a new wide-body aircraft. But the national flag carrier later changed the procedure to procure an old aircraft while issuing the request for proposal to select the supplier.
“The 55th annual report of the OAG questioned the procedure adopted by the NAC and the pricing of the aircraft,” said Sharma.
In its largest ever aircraft purchase deal, the NAC had purchased two A330-200 Airbus aircraft from the US-based AAR Corp for $209.6 million.
The NAC was required to invite proposals only from the 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 request for proposal, the NAC allowed the 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 told the meeting.
He added that the top NAC officials involved in aircraft procurement failed to convince his office the reasons behind adopting the procedure for buying an old aircraft while it had to buy a new one.
The second issue that the OAG report raised is of pricing. The OAG stated that despite the NAC’s direct
contact with Airbus, from which it purchased two brand new narrow-body aircraft in 2015, the NAC didn’t seek Airbus rates to compare the price.
“The NAC had the option of buying the aircraft directly from Airbus as it did in 2015 for the narrow-body plane. Public Procurement Act allows it. The plane manufacturers supply aircraft at a much-reduced price than the one mentioned in their website,” said Sharma.
During the meeting, lawmakers wanted to know from the OAG whether the Public Procurement Act was followed while purchasing the aircraft.
Since the OAG is working to audit the government transactions for the fiscal year 2017-18, Sharma said his office will review all the procurement details of the wide-body aircraft. “We will evaluate whether the NAC paid more than its real price, the issue of warranty and guarantee, whether the plane has the load-carrying capacity as per the specifications, and whether they were purchased as per the flight plans and route specification,” Sharma told the lawmakers.
The complaint registered at the Commission for Investigation of Abuse of Authority says that both the aircraft have low load-carrying capacities than what was specified in the tender notice. The anti-graft body is already investigating the deal.