EPF, which is regarded as the largest non-financial institution in terms of deposits worth Rs 80 billion belonging to some 440,000 government employees, is the only lender ready to extend loan to help NAC purchase two aircraft.
However, the lender has put government guarantee -- government´s legal pledge to payback if NAC fails to pay back loan - as the main condition to sanction the loan.
Speaking at an interaction organized by parliamentary Public Accounts Committee (PAC) on Tuesday, top officials of EPF dropped hint that issuance of a government payback guarantee alone will not be enough to secure release of loans from EPF.
Financially sick NAC has lately initiated a plan to buy to two aircraft -- A320-200 and A330-200 -- manufactured by European giant Airbus at the cost of around Rs 10 billion.
“We want the government to payback the state-guaranteed loans extended to Nepal Oil Corporation and Nepal Orient Magnesite before we take formal decision on extending loans to NAC,” Arvinda Kumar Shrestha, chairman of EPF, said.
He repeatedly ruled out possibility of releasing loan to the ailing national carrier without receiving a government guarantee. "There is no question of releasing the loans without a government guarantee for both interest and principal," he stressed. Shrestha further added that the board of the EPF will take no decision on lending the money to NAC unless PAC endorses the NAC´s plan to buy two aircraft.
As per the 10-point condition laid out by a meeting of Board of Directors some eight months ago, EPF has proposed a 10 percent annual interest rate on the loans to be extended to NAC. However, EPF signaled that it would be ready to review the rate once the planned new aircraft come into operation.
Likewise, EPF has also demanded that 50 percent of the income that NAC will earn from the operation of the two planned aircrafts should be used in repaying the loans taken from it.
Earlier, EPF had agreed to extend loans between Rs 5 billion to 10 billion to the national flag carrier provided that the state issued payback guarantee.
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