The Parliamentary Public Accounts Committee has formed a seven-member sub-panel to look into the alleged financial irregularities in the procurement of two wide-body aircraft by the Nepal Airlines Corporation.

The PAC formed the panel led by Nepali Congress lawmaker Rajan KC after the Public Procurement Monitoring Office (PPMO) concluded that the NAC wide-body procurement process flouted the Public Procurement Act-2007.

The PAC had sought the PPMO’s opinion on the Airbus deal after questions were raised over the procurement process and ownership of the newly acquired aircraft.

The KC-led panel has been asked to submit its report in line with the findings of the Office of the Auditor General and the PPMO. This is the second panel formed on the wide-body aircraft procurement by the NAC, after the one formed by the International Relations Committee.

Currently, two parliamentary committees, including the PAC and the International Relations Committee, are probing the multi-billion-rupee Airbus deal amid conflicting claims. While the Tourism Ministry has claimed that the jet purchase deal was transparent as the due process was followed and ownership of the aircraft rests with the NAC, the auditor general’s report claims that the corporation breached its own financial by-law in the deal.

The PPMO has reported that any specific brand, trademark, name, patent, design type and origin of the aircraft or manufacturer should not be mentioned in the bid specifications but the NAC issued the Request for Proposal (RFP) mentioning A 330-200 Airbus with a Rolls-Royce Trend 772 B engine.

The NAC estimated the cost based on the price of the aircraft maintained eight years ago instead of the current rate. While preparing the estimate, the demand for an aircraft having flown up to 1,000 hours was not incorporated.

When the NAC decided to buy an A 330-200, it was not clear if Airbus was the only firm that could sell the plane to the Nepali carrier. The state-owned entity didn’t explore alternatives in line with the Public Procurement Act, the PPMO stated.

The procurement monitoring body has also questioned whether the aircraft could be purchased through an RFP. “According to Clause 2 (C) of the Public Procurement Act-2063, an aircraft also falls under the category of goods. So there is no provision in the law that ‘goods’ can be procured through an RFP,” the PPMO report pointed out.

The report has also said that the RFP does not match the international competitive bidding process. It was not clear if the RFP is a tender process as per the law or any other instrument, it added. The RFP called by the state-run entity also does not bear the necessary components of a tender. According to the report, the RFP misses vital components of any tender notice such as currency of the price to be quoted, basis for evaluation and selection, validation deadline of the tender and the bid security amount.

“Conditions for the procurement agreement and implementation of those conditions, declaration in the notice that the bid will be rejected in case there is a conflict of interest and notice related to action in case of corruption are other missing components.”

KC was chosen to lead the panel after lawmakers Hridayesh Tripathi and Minendra Rijal expressed their unwillingness to be part of the panel. NC lawmaker Rijal appeared critical of the deal during earlier meetings.  Bharat Kumar Shah, the PAC chair, said the committee has 15 days to look into the case and submit its report.

The PAC has already summoned Minister for Culture, Tourism and Civil Aviation Rabindra Adhikari and high-ranking NAC officials over the anomalies in the procurement process.