Kathmandu denies plans to privatise Nepal Airlines
The Nepal government has formally denied earlier claims it was planning to partially privatise its debt-ridden flag carrier Nepal Airlines (RA, Kathmandu).
“So far, the Ministry has no plans to convert it into a private company. There are no programmes so far and no discussions on the privatisation process,” read a brief statement on June 27, 2021, signed by Tara Nath Adhikari, Joint Secretary of the Civil Aviation Authority of Nepal (CAAN) and spokesperson for the Ministry of Culture, Tourism, and Civil Aviation, the airline’s shareholder representative. He was responding to what he termed “misleading information being disseminated by various dignitaries of the Ministry”.
As previously reported, Finance Minister Bishnu Prasad Paudel recently made an announcement that the airline would be restructured and that strategic partners would be invited soon through an open tender process in order to recapitalise the airline, but gave no further details. He made the announcement while delivering his annual budget plan for the Fiscal Year 2021/22 on May 15, 2021. Nepalese media reacted with scepticism about the news, saying the government had repeatedly announced this before but had yet to implement it.
This time, however, the government had reportedly started on a feasibility study for the partial privatisation as announced by the finance minister. Draft documents had been prepared, but this was met by protests from the airline’s employees, who accused the government and the airline’s management of colluding with a private investor to sell off the airline, local media reported. The privatisation plans had also been criticised by former Prime Minister Baburam Bhattarai, they said.
As reported, the government had launched an internal audit to assess the value of all of Nepal Airlines’ assets ahead of its planned partial privatisation through a public-private partnership. The audit was expected to confirm longstanding reports about the carrier’s rapidly deteriorating financial standing and outlook. Due to the non-payment of interest, Nepal Airlines’ debts reportedly increased to NPR46.1 billion Nepalese rupees (USD395.4 million) at the end of 2020, up by around NPR2 billion (USD17.1 million) compared to July 2020.
Meanwhile, Nepal Airlines General Manager Dim Prasad Poudel, in an interview with Birat Online News, dismissed the rumours that the airline was about to be sold to a private investor, adding that the employees were protesting without having the necessary understanding of the facts and that he had called for dialogue on the matter.
He confirmed that corporatisation was being debated and that the government was ready to assist in any institutional reform, but he stressed that the airline would remain under government control. “We agree that the company model should be taken and that the company should be fully owned by the Government of Nepal,” he said. “We have started the debate with the objective of developing it as a national flag carrier owned by the Government. How much will the Government invest, how many shares will be given to the strategic partner, how many shares will be given to the employees, how many shares will be given to the tourism entrepreneurs of Nepal? We are debating,” he said.
Poudel pointed out that the government was heavily invested in the airline, having secured large loans, but was “trying to rise above the situation where it has to pay the company every year”.
“Everyone knows that the corporation has collapsed. The corporation has held discussions with the departmental ministries, the Finance Ministry, the Prime Minister, and the Office of the Council of Ministers in several stages to overcome this situation. When we appealed to the Government to save the corporation, it was said that ‘we will help’, but the corporation also needs some commitment. We informed the Government about the liability of the corporation. This obligation has to be paid by mid-July,” he stressed.