Nepal has requested China to convert a loan of 1,378.74 million yuan (around Rs25.88 billion) from the China Exim Bank into a grant. The Nepal government had used this loan to finance the construction of Pokhara International Airport.

Deputy Prime Minister and Finance Minister Bishnu Prasad Paudel made the request during a meeting with Yang Weiqun, vice chairman of the China International Development Cooperation Agency (CIDCA), held at the Ministry of Finance on Thursday, according to a statement issued by Mahesh Bhattarai, spokesperson for the ministry, on Thursday.

According to Bhattarai, the ministry has also written to the Chinese side making the same request. Dhani Ram Sharma, chief of the International Economic Cooperation Coordination Division, handed over the letter to Yang during the same meeting.

Although the airport came into operation after inauguration in January 2023, it has failed to generate sufficient income to sustain itself and service the loan. Failing to operate regular international flights from the airport, the authorities are now using it for domestic flights.

Therefore, successive governments in Nepal requested the Chinese side to convert the loan into a grant, multiple times in the past as well.

Responding to a lawmaker’s query, former prime minister Pushpa Kamal Dahal, while addressing a meeting of the House of Representatives in March, had said that diplomatic efforts were underway to convert the loan received from China into grant.

He had told lawmakers that during his China visit there had been ‘an agreement in principle’ for operating international flights from China to Pokhara. “I believe some international flights will arrive in Pokhara and the problem will be resolved soon,” Dahal had assured lawmakers. But, that has not happened.

The China Exim Bank had approved the soft loan to Nepal for the construction of Pokhara International Airport in 2015.

During Thursday’s meeting, Finance Minister Paudel also requested support for developing infrastructure at the Madan Bhandari Science and Technology University. In response, the Chinese official said they would respond after studying the request.

On the occasion, four different letters of exchange were signed to upgrade the 8.2 kilometer Kalanki-Maharajgunj Ring Road, build an Integrated Check Post (ICP) and an Inland Container Depot (ICD) at Korala in Mustang, and conduct a feasibility study for repair and maintenance of the Araniko Highway.