National flag carrier, Nepal Airlines Corporation (NAC) has demanded a sum of NRs 20 billion with government for capital enhancement.
Ashok Sigdel, spokesperson of NAC stated that according to the decision of corporation board of director, the corporation has demanded Rs 20 billion for capital enhancement. He said that the current capital is too low for the expansion of market for Nepal Airlines.
Previously, the board of directors decided to demand NRs 20 billion with the contemporary government of Sher Bahadur Deuba. However, along due to the change of Government, the Ministry of Culture, Tourism and Civil Aviation (MoCTCA) had suggested the corporation to revise the amount. According to the Ministry’s suggestion, the corporation decided to request NRs 5 billion from the Ministry. The letter was sent to Finance Ministry on the month of May, 2018. Unfortunately, the Finance Minister returned the document.
Madan Kharel, newly appointed executive chairman of NAC agreed on the file of Former Corporation’s board of director and sent the letter to MoCTCA seeking NRs 20 billion.
Currently, the capital of NAC is only NRs. 370 million. However, NAC’s capital amounts to over 3.10 billion rupees after adding the cost of a MA60 and Y-12e aircraft granted by China. The government has suggested NAC to include the grant of NRs 2.13 billion for MA 60 and NRs 580 million for Y-12e aircraft to extend the capital.
Spokesperson Sigdel claimed that the file sent for capital expansion has been presented to Ministry of Finance. “It is necessary for the corporation to enhance the capital and the ministry is also optimistic in the matter of providing financial support, “he added. He also said that because the capital is very low, the debt interest payment is getting hard to clear. The corporation does not have enough capital even to buy a single aircraft. He said that in such a condition, it would be impossible to extend the market.
Also, the loan of the Corporation is more than NRs. 37 billion. Currently, NAC is spending its most of the income on paying interest Sigdel said. Meanwhile, the corporation is not being able to generate enough income by operating flights effectively.
The main source of income is still from Ground handling. NAC has already started preparing to buy 6 new Twin Otters for domestic flights. The Board of Directors has approved the procurement of two narrow body jet Airbus A320neo (new engine option) aircraft too.
The corporation has a loan of 10 billion rupees taken from the financial fund of the financial year 2071/072 to purchase Airbus. The interest rate of this loan is 10.5 percent now. Similarly, NAC has loan of the amount of rupees worth NRs. 2.12 billion for paying the amount of interest in 1.75 percent interest rate by 6 years.
Currently. NAC has 2 widebody, 2 Airbus ad 1 Boeing aircraft for operating international flights whereas 4 Y-12e, 2 MA-60 and 2 Twin-otter for conducting domestic flights