Confirmation acquired for the loan to construct Pokhara International Airport (PIA) by Finance Ministry
Pokhara – 19 December 2016
Finance Ministry has confirmed the soft loan agreement with China for the construction of Pokhara International Airport (PIA) by sending a letter of approval on Friday. The $215.96 million soft loan deal was made on March which will now be effective after the official confirmation by the borrower.
The proposed airport would be located in Chinnedanda-3 km to the east of Pokhara’s existing domestic airport. Now that the budget could be tapped, the construction of the airport is expected to go forth smoothly.
The soft loan agreement was made during the reign of Prime Minister KP Sharma Oli’s visit to Beijing in March. The government will receive the loan from China EXIM Bank whose 25 percent would be interest free and the rest would be on 2 percent per annum.
The time given for the loan repayment is 20 years, along a grace period of 7 years in case the loan repayment hasn’t been completed and that time would be interest-free.
But, the government has still the potential risk of inconsistent foreign exchange rates though the credit has been signed by Ministry of Finance for 5 percent interest per annum which will be provided by Chinese Bank to CAAN.
CAAN will be repaying the laon from the income generated by the airport.
China CAMC Engineering won the contract for the construction in May, 2014 and will confirm the design of the airport in May 2017. The civil works is slated to begin from July next year.
The soil filing works for the proposed runway will be completed after the Chinese contractor will submit the preliminary design of the airport that will determine of the elevation of the runway.
Additionally, extra plot of land will be acquired to establish the buffer zone round the airport.
A preliminary survey to obtain 107 ropanis of land to found a 10-metre wide buffer zone, or Ring Road outside the airport has been started. The move is intended at fortifying the airport as per the obligation of the International Civil Aviation Organization.
As per the feasibility report, the airport will ensure a 2,500×45-metres runway. It will lodge medium category jets like Boeing 757 and Airbus 320.
The airport will be constructed under the engineering procurement and construction (EPC) model. Under an EPC contract, a single contractor takes duty for all components like design, engineering, construction and procurement.
The government plans to finish the project by July 2020.