Ministry of Finance (MoF), which must stand as a guarantor for NAC for its loan deals worth Rs 10 billion with the Employees´ Provident Fund (EPF) to finalize the deal, said Thursday that it would take at least two to three weeks to evaluate the legal, technical and business aspects of the deal.
“Since the case is technical, we are forming a committee to calculate all seen and unseen costs of the present deal and ascertain its viability,” said Rameshwor Khanal, secretary at MoF. He added that MoF might need still more time to reach to conclusion on the deal.
His statement indicates that NAC, even if its case proved strong enough, might not get government guarantee within 16 days -- a period within which Airbus has sought the national flag carrier to sign the agreement. Airbus´ latest deadline to NAC to sign the agreement had ended on Wednesday.
NAC appears still miles away from convincing the lawmakers in Public Accounts Committee (PAC) that its deal is fair, complies with law and is based on sound technical and business analysis.
MoF has also said that it could force NAC to go for two narrow body aircraft if its study concluded that it would ensure better yield than what NAC has pushed for now. “If it (deal) did not appear viable, we might even ask NAC to terminate the deal,” Khanal apprised the lawmakers at PAC.
His statement instantly drew concerns over what will happen to the commitment money worth $750,000 that the NAC management paid to the European manufacturer if the deal proved unviable.
Lawmakers, moreover, asked MoF to hire even overseas consultant, if required, to reach to its conclusion.
As PAC volleyed the case to the MoF´s court, lawmakers also asked the EPF to conduct the NAC´s due diligence. “It is the basic duty of the lender and EPF cannot escape this responsibility,” said Prakash Chandra Lohani, a lawmaker.
During Thursday´s discussions, Nagendra Ghimire, secretary at the Ministry of Tourism and Civil Aviation argued that NAC should be allowed to bring in new aircraft to make Nepal Tourism Year 2011 campaign successful.
Lawmakers said they are unanimous over the idea of inducting new aircraft in NAC fleet. “But it must be done following due legal procedures and based on NAC´s own capacity, requirement and aircraft economic yield,” said Hridayesh Tripathi, another lawmaker.
NAC Executive Chairman Sugat Ratna Kansakar said the management had sent the commitment money after following all due procedures. However, its Managing Director KB Limbu argued that payment was done without NAC Board´s approval.
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