Kathmandu, 18 April: A subcommittee under the Public Accounts Committee of the Parliament has nearly finalized a draft report concluding that there may have been irregularities amounting to around NPR 10 billion (approx. USD 75 million) during the bidding and construction phases of the Pokhara International Airport project. The report highlights collusion between the Civil Aviation Authority of Nepal (CAAN) and the Chinese construction company China CAMC Engineering Co. Ltd..
Following rising concerns of large-scale corruption in the airport project, the Public Accounts Committee formed a subcommittee to investigate. The Commission for the Investigation of Abuse of Authority (CIAA) is also conducting a separate inquiry, having raided the airport office a few months ago and seized relevant documents for further investigation.
The CIAA has already questioned Pradeep Adhikari, who was initially the project chief during the early stages of construction and later became Director General of CAAN, allegedly with political backing. The subcommittee suspects a possible misappropriation of NPR 10 billion, urging a thorough investigation by the CIAA.
According to a subcommittee member, irregularities were found in several areas, including air conditioning installation, drainage construction, earthworks, fuel tank setup, consultancy fees, and tax exemptions. For example, NPR 320.2 million was shown as expenditure just for cutting through a ridge called Chinedanda—a job that was contractually the responsibility of the contractor.
Furthermore, $1.5 million USD was reportedly spent on excavation and soil transport, an amount viewed as excessive and suspicious. The subcommittee claims that irregularities were identified under 11 budget headings, including non-compliant tax exemptions resulting in revenue leakage.
The agreement between CAAN and the contractor stipulated that the contractor was responsible for all infrastructure and facilities required for full airport operation, including clearing the Chinedanda ridge. However, contrary to the agreement, CAAN separately paid another contractor NPR 320.2 million for this work.
Similarly, for installing the HVAC (Heating, Ventilation, and Air Conditioning) system, $742,659 USD was paid in contradiction to the project agreement, which stated it should have been covered by the contractor. Over NPR 1 billion was allegedly misused under the guise of drainage construction.
According to the report, $443,500 USD was paid for soil filling in areas like the runway and taxiway, but this payment is suspected to be illegal. In another case, $550,000 USD was paid for bringing in soil that was never actually transported.
The subcommittee has recommended that Pradeep Adhikari be immediately suspended for further investigation. He served as project head from 2014 to 2017 and later became CAAN’s Director General in 2021, allegedly due to political connections. Sources allege that high-level political leaders also profited financially from the mismanagement under his leadership.
Reportedly, Adhikari and his team colluded with the Council of Ministers, Finance Ministry, and Tourism Ministry to revise the original cost estimate by 86%, switching the contract from an EPC (Engineering, Procurement, and Construction) model to a BOQ (Bill of Quantity) model to unlawfully pay the Chinese contractor more.
The report also points out that customs and VAT exemptions granted to the Chinese contractor resulted in over NPR 2 billion in losses to the state, enabled by the Finance Ministry.
Initially, CAAN had estimated the airport’s cost at $175 million USD. Under the condition set by China’s EXIM Bank, only Chinese companies were allowed to bid. Among three bidders, China CAMC Engineering Co. submitted the lowest bid at $305 million USD, which was far above the initial estimate and violated Nepal’s Public Procurement Act.
Due to this discrepancy, the cost estimate was later inflated to $264 million USD to make the deal seem legitimate. However, this manipulation violated legal provisions that prohibit awarding contracts above the pre-approved cost estimate.
