Kathmandu [Nepal], April 18 (ANI): Embezzlement of funds amounting about Nepali Rupees (NRs) 14 billion has been made during the construction of China-loaned Pokhara International Airport, a parliamentary subpanel has concluded after months-long investigation.

The investigation made by the subpanel of the House of Representatives' Public Accounts Committee (PAC) in its final report has confirmed irregularities and corruption in the construction of the airport.

China CAMC Engineering, the construction division of state-owned conglomerate Sinomach, played a pivotal role in the Pokhara airport project. It imported building materials and machinery from China, and the airport itself was brimming with Chinese-made security and industrial technology. Despite China's claims about the project's quality.

The 12-member committee, which has finalized the draft report nearly 10 months after its formation has unearthed irregularities and corruption involved in the construction as well as taxes exempted to the construction companies.

The subpanel was led by Rastriya Prajatantra Party (RPP) president Rajendra Lingden. The subpanel has classified the irregularities under 11 different sub-topics and has been distributed to lawmakers for further study.

'In the investigation we have found irregularities which worth to about NRs 14 Billion in the current exchange rate of the US Dollars,' one of the member of the subpanel told ANI as the report hasn't been made public.

'The Finance Ministry also hasn't given all the requested documents at the time of our investigation. The figures might be high but we are sure that the construction of Pokhara International Airport is one of the largest corruption scandal in Nepali history,' the member added. The Pokhara International Airport dubbed as 'While Elephant' in the preliminary stage was estimated to be constructed in NRs 14 Billion but the expenses were later raised to NRs 22 Billion.

Quality of the construction materials used, always has been in question as the dubbed International Airport is only seeing Chinese chartered aircrafts landing with others differing to fly in and out.

The subpanel also has suggested that the soil at the construction site was not suitable to build the airport as the runway's elevation had to be increased. Though nearly USD 5.5 million was paid to cover the cost of transporting the soil and pebbles to the site from at least 5km away, but the study has found no soil was brought from outside.

Similarly, the elevation of the runway must be between 2,677 and 2,674 feet above sea level, as per the agreement. Filling of the sand and pebbles was necessary to attain the required elevation. However, the runway was built at 2,636 feet above sea level by going against the agreement, per the study.

As per the agreement with the Chinese company awarded with the contract to construct the airport has the clause to make all necessary arrangements to build and make the airport operateable. But the Civil Aviation Authority of Nepal (CAAN) awarded a private firm to level down a hill that would pose threat to the aircrafts. 'A total of 320 million Nepali rupees was expended by CAAN for the purpose,' the study states.

Likewise, it is the responsibility of the Chinese contractor to install all the ACs in the airport but the CAAN spent another USD USD 7,42,659 to install HVAC system. During the construction of drainage alongside the runway, taxi-bay, apron 10 million 6 hundred and 48 thousand USD was paid to the Chinese constructor but the subpanel found that the payment was made without any works done.

Similarly, the Chinese contractor has been found to be paid USD 4.435 million without undertaking the work of pressing the soil to level the runway, taxi-way and drainage. The subpanel has made another astonishing discovery that the Chinese constructor was paid USD 5.5 without bringing soil from external source.

The subpanel also has found that 'construction company has been given tax exemption worth NRs. 2.2 billion though contract agreement clearly says that construction company would pay the taxes.

The subpanel has concluded that the Civil Aviation Authority of Nepal, overseeing the construction to be directly involved in the corruption and irregularities. The report has recommended immediate suspension of Pradeep Adhikari, director general at the authority, as well as further investigation. Adhikari was the head of the project from 2014 to 2017.

The Lingden-led panel has also recommended investigation against the authority's former director generals Sanjeev Gautam and Rajan Pokharel. Moreover, it has said that Binesh Munakarmi, the project head, and Baburam Poudel, director at the authority, too need to be investigated after their suspension.

It has also spelled out the need for a probe against Chandmala Shrestha and Prabin Neupane, directors of the national pride projects, and its administrative chief Rajendra Prasad Poudel.

The Pokhara International Airport which since its opening earlier this year hasn't seen any frequent International flights except for the chartered Chinese flights which appears in rare occasions. Dubbed as dream come true for locals of Pokhara- the touristique destination of Nepal, the Pokhara International airport upon its completion has been claimed to be part of China's grand ambitions, aligning with President Xi Jinping's signature infrastructure campaign, the Belt and Road Initiative (BRI).

Days before the formal inauguration of the airport, Chinese Ambassador claimed it to be part of BRI which was rejected by Nepal Government. Soon after the handover the Pokhara airport exemplified the perils that came with importing China's infrastructure-at-any-cost development model, disproportionately benefiting Chinese firms at the expense of the borrowing nation.

Multiple individuals involved in the project and a thorough examination of thousands of documents indicated that China CAMC Engineering had consistently dictated terms to maximize profits and protect its interests. Simultaneously, it systematically dismantled Nepali oversight. As a consequence, Nepal found itself entangled in significant debt to Chinese creditors without the expected influx of passengers to repay the loans.

Finance Ministry of the Himalayan Nation before had signed a memorandum of understanding supporting CAMC's proposal in 2011, even before an official bidding process had started. The Chinese loan agreement exclusively allowed Chinese firms to bid for the project.

CAMC initially submitted a bid for USD 305 million, nearly double Nepal's cost estimate for the airport. This drew criticism from Nepali politicians, who accused the process of being rigged and the price inflated. Following the outcry, CAMC lowered its bid to USD 216 million, reducing the cost by approximately 30 per cent.

In 2016, China and Nepal formalized a 20-year agreement for the project, with a quarter of the funding provided as an interest-free loan. Nepal intended to borrow the remainder from China's Export-Import Bank at a 2 per cent interest rate, with repayment scheduled to begin in 2026.

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 consultants, hampered the project.

Initially earmarked at USD 2.8 million, the budget for hiring consultants to ensure CAMC's compliance with international construction standards was eventually reduced to a mere USD 10,000, diverting funds elsewhere.

This lack of oversight allowed CAMC to initiate work before consultants were in place and perform construction work that did not meet international standards. Key components, such as soil density tests for the runway's foundation, were omitted, jeopardizing the runway's future stability.

Other oversights included the airport's drainage system design, ignoring historical rainfall data and sloping topography, increasing the risk of flooding. The quality of Chinese-made building materials and the identity of vendors were inadequately documented, contravening the terms of CAMC's contract with Nepal.

While consulting efforts were expected to oversee CAMC's work, the Chinese company managed to sidestep consultants and interact directly with Nepali officials who had limited construction experience. Any efforts to seek additional information or documentation were often fruitless.

China's Export-Import Bank had commissioned China IPPR International Engineering, a consulting firm, to ensure the quality, safety, and schedule of the project and to confirm Nepal's satisfaction with CAMC's work.

However, the situation grew murkier in 2019 when CAMC acquired IPPR, turning it from a sister company into a direct subsidiary. IPPR's fees came from Nepal as part of its loan from the Chinese bank.

Furthermore, allegations surfaced that documents 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, Nepal's aspirations for the airport were put in jeopardy. Buddha Air, Nepal's largest airline, had requested permits for flights to India but awaited approval from the Indian government. A feasibility study commissioned by CAMC had projected passenger numbers that would enable the airport to repay its loans from profits, but as of now, no international flights have commenced.

Nepali officials have reportedly requested that China convert the loan into a grant due to the airport's financial challenges, a matter discussed during Prime Minister Pushpa Kamal Dahal's visit to Beijing in late September 2023. The joint statement issued by China and Nepal during the visit acknowledged the completion and operation of the Pokhara airport but made no mention of plans to waive the loan.

The Pokhara airport serves as a stark example of the pitfalls associated with importing China's infrastructure development model, highlighting concerns about financial sustainability and transparency, all while fueling geopolitical rivalries in the region. (ANI)