Pokhara International Airport (Nepal)
Nepal’s new Pokhara International Airport built with the assistance from the Chinese has come under a certain scrutiny and a foreign policy expert called for stern government action before it turns up akin to the Hambantota Port disaster that occurred in Sri Lanka.
The Former Foreign Relations Adviser to Nepalese former Prime Minister Sher Bahadur Deuba, Arun Kumar Subedi called onto the Nepal government to take a stern action after an investigative piece by the New York Times exposed the wrongdoings and flaws at the time of construction of the much-hyped airport.
In an interview with a media agency, Arum Kumar Subedi said “Up to now the conditions are analogous, more or less the same. Let us pray our government will take firm action not to make it into the Hambantota of Nepal,” he said while comparing the situation that with Sri Lanka.
Chinese Assistance
The construction of Nepal’s Pokhara Airport, primarily funded by the Chinese companies has raised concerns about the quality of the work, manipulation of oversights, and the burden of debt on Nepal. Additionally, the airports association with the Chinese Belt and Road Initiative (BRI) has ignited diplomatic tensions with India, making it challenging for the airport to attract international flights.
The international airport serves a stark example of the pitfalls associated with importing China’s infrastructural development model, highlighting concerns about financial sustainability and transparency, all while fueling geopolitical rivalries in the region.
Since its opening earlier this year has not seen any frequent international flights except for the chartered Chinese flights which appear on rare occasions.
Dubbed as a dream come true for the locals of Pokhara, the tourist destination of Nepal, the airport upon its completion has claimed to be a part of grand Chinese ambitions aligning with President Xi Jinping signature infrastructure campaign, the Belt and Road Initiative (BRI).
Days before the formal inauguration of the airport, the Chinese ambassador claimed it to be a part of the BRI which was rejected by the Nepal Government. Soon after the handover, the Pokhara Airport exemplified the perils that came with imported Chinese infrastructure at any cost development disproportionally benefiting Chinese firms at the expense of the borrowing nation.
Role Played by CAMC
The China CAMC Engineering, the construction division of state owned conglomerate Sinomach played a pivotal role in the Pokhara International Airport. It imported building materials from China and the airport itself was full of Chinese security and industrial technology. Despite Chinese claims about the projects quality an American media agency said.
Multiple Individuals involved the project and a thorough examination of thousands of documents indicated that the Chinese CAMC Engineering had constantly dictated terms to maximise profits and protect its interests.
Simultaneously, it systematically dismantled Nepalese oversight and as a consequence, Nepal found itself entangled in significant debts to the Chinese creditors without influx of passengers to repay the loans.
“The international community, basically, the multilateral agencies which are our development partners are eyeing this particular project (Pokhara International Airport). The outcomes of the project have received little recognition by our development partners as well as analysts and economic experts. The impact of this particular airport in the international community related to Nepal is not positive,” claimed Subedi, further adding “in one word, its odyssey for nothing at the present.
The Nepalese finance ministry had earlier signed a memorandum of understanding supporting CAMC proposal in 2011, even before an official bidding process started. The Chinese Loan Agreement exclusively allowed Chinese firms to bid the projects. CAMC initially submitted a bid for USD 305 million nearly doubled the cost estimate at the airport, and this drew criticism from Nepali politicians, who accused the process of being rigged and inflated prices.
Following the outcry, the CAMC lowered its bid to USD 216 million, reducing the cost by approximately thirty percent. In the year 2016, China and Nepal formalised a 20-year agreement for the project with a quarter of funding provided as an interest free loan. It intended to borrow the remainder from Chinese import and export bank at a two percent interest, with repayment scheduled to begin in 2026.
Inherent Shortcomings
As construction progressed, glaring issues came to light. The Civil Aviation Authority of Nepal was responsible for overseeing the Chinese contractor. But the lack of experienced personnel, combined with the inadequate allocation of funds for consultations, hampered the project.
Initially earmarked at the USD 2.8 million, the budget for hiring consultants was to ensure CAMCs compliance with international constructions standards, However, it was reduced to a mere USD 10,000 diverting fund elsewhere. This lack of oversight allowed CAMC to initiate work before consultants
Key components suchas soil density test for thr runway foundation, were omitted, jeopardising the runway’s future stability. Other oversights included airport drainage system, ignoring the risk of rainfall data and topography increased the risk of flooding. The quality of Chinese building materials and the identity of vendors were inadequately documented contravening the terms of the CAPC with Nepal.
While consulting efforts were expected to oversee the CAMC work, the Chinese company managed to sidestep consultants and directly interact with the Nepali officials who had limited construction experience.
China’s Export Import Banks had commissioned China IPPR International Engineering, a consulting firm to ensure the project’s quality safety and scheduled to confirm Nepal’s satisfaction with CAMC work. However, the situation grew murkier in 2019 when the CAMC acquired IPPR, turning it into a sister company into a direct subsidiary.
Furthermore, allegations surfaced that document related to the qualifications of IPPR’s workers in Pokhara had been falsified. In some cases, even employee credentials were manipulated. Such practices revealed a disconcerting disregard for transparency and accountability. As Pokhara Airport struggled to attract international flights, especially from Indian airlines, the Nepal aspiration for the airport where put in jeopardy.
Nepali officials have reportedly requested that China convert the loan into a grant due to airports financial challenges, a matter discussed during Pushpa Kamal Dahal (Prachanda) visit to Beijing in late September. The joint statement issued by China and Nepal during the visit acknowledged the completion and operation of the Pokhara airport but did not mention plans to waive the loan
“The best way to get off this trap is to monetize the assets and whatever the sum comes from the asset monetization, be kept under viability of debt funding and all the loan (amount) that remains can be paid in a single shot.
Otherwise, even if it is an interest-free loan it would be a big debt trap because the country has to pay at least five per cent for the exchange rate fluctuation. So even in zero per cent interest, the overall impact will be at least five per cent,” suggested Subedi.
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