By Ram Khatry
2 January 2019
There is something strikingly amusing about the purchase of two wide-body planes by Nepal Airlines Corporation (NAC).
Believe it or not, the two A330s were bought for the price of one. To be even more accurate, less than the price of one.
Ek kaa do, ek kaa do, ek kaa do — yell street vendors in the subcontinent trying to push two units of their merchandise for the price of one. The juxtaposition of kerbside sale of made-in-India goodies and the highflying world of aircraft merchants may sound little too far-fetched. But the planes purchased under the leadership of Sugat Ratna Kangsakar were even better than the ingenious ek kaa do sales pitch.
Aircraft industry insider Justin Dubon, the head of Global News at Airbus, recently told southasia.com.au that an A330 usually costs US$238.5 million.
But the two A330s NAC bought cost only US$209.6 million – total cost for both of them. This is less than half of the listed price for one, although there are variations depending on engine, capacity and various other factors. Even if NAC had bought planes that had clocked 1000 hours, the price should not have gone down that low.
Mr Dubon would not be tricked into speculating as to why NAC got the two planes so cheap. “All financial details are between the airline and the financiers to disclose,” he said.
It appears NAC secured a rare deal that reduced the total cost of the two wide-body planes by a whopping 56.06 percent. Instead of having to fork with US$477 million (for two planes at the rate of US$238.5 million each), Nepal Airlines Corporation paid only US$209.6 million.
It should have been a matter of celebration that the NAC boss Sugat Ratna Kangasakar could save US$267 million for one of the poorest countries in the world. Instead, the NAC Managing Director is facing the sack from the federal government; a parliamentary subcommittee today recommended his immediate suspension. The sub-committee under Nepal’s Public Accounts Committee (PAC) was formed to look into the suspected corruption behind the strikingly cheap procurement.
But Dr Bharat Raj Poudel, a Brisbane-based media expert who keenly follows the goings-on back home, questioned the reliability of the findings of the parliamentary subcommittee. He remarked that the members of the subcommittee aren’t specialist enough to be able to scientifically probe a complex aircraft deal of this nature. He, however, agreed that the subcommittee has raised valid procedural and moral questions on the procurement process.
“The subcommittee chairman himself said that it is not yet known as to how much money Airbus received from NAC. So, how can it be possible for them to calculate transactions and determine that funds were misappropriated?”, Dr Poudel asked indicating more rigorous and specialist probe is required for getting to the bottom of the A330 saga.
“On top of this fishy deal, some three dozen people purporting to represent the government and NAC visited Air Bus premises. What was the input of their visit after having wasted millions of rupees of the Nepalese tax payers? This in itself is a corruption,” he added.
The PAC subcommittee has concluded that Mr Kangsakar, along with present and past ministers and government secretaries, masterminded the biggest corruption the impoverished nation has ever dealt with.
It put the suspected corruption at NRs 4.3 billion, approximately US$38 million.
A quick study of the Nepali-language “conclusion” of the findings indicates that the subcommittee suspects policies and bylaws of the Nepal Airlines Corporation were subverted in order to create a conducive environment for corruption.