Government is planning to bring in strategic financial partner for the national flag carrier of the country, Nepal Airlines Corporation(NAC). The move was suggested by the Ministry of Culture, Tourism and Civil Aviation (MoCTCA) to Ministry of Finance (MoF) to take suggestion to bring the management partner to aid out the corporation in financial area.
MoCTCA is set to commence the hiring process of financial strategic partner for NAC as soon as the MoF give positive response to it. Acting secretary of MoCTCA Suresh Acharya added that financial performance of the corporation is falling far behind for many years and to improve the carriers’ financial status and provide equal investment, the corporation is seeking for the financial strategic partner.
Currently, NAC has paid-up capital of only Rs 160 million and due to lack strong financial mechanism NAC is lagging to generate revenue for long term. The opinion was forwarded as NAC requires more capital and investment rather than other government enterprises due to its nature and adding the partner can help to boost the condition of the corporation.
NAC had made the profit of Rs 43.3 million profit in 2016-17 fiscal year but till the period it still has loss of Rs 1.82 billion. Having financial partner will help to identify the leakages at the corporation and will help to reorganize the entire commercial aspect of the national flag carrier to make it economically strong added Acharya.
The plan to hire the strategic management partner for NAC was made back in 2013 but the government still has not been able to do it. The proposal to hire German-based Lufthansa Consulting Group as strategic management partner for NAC was sent back to MoCTCA by MoF back in January asking to complete hiring process complying with existing laws but the issue has still not been discussed. NAC had sought for request for proposals (RFPs) for strategic management partner from airlines of only five countries (United States, the United Kingdom, France, Germany and Australia).
Central bank had allowed banks and financial institutions (BFIs) to borrow funds from foreign BFIs but bringing equity investment to corporation is seen to be justifiable.