At last, the Civil Aviation Authority of Nepal (CAAN) board today approved construction of regional international airport in Pokhara under the revised cost of $216 million to CAMC Engineering after a long wait.

The board meeting of the aviation regulator – chaired by Tourism and Civil Aviation minister Bhim Acharya approved the project according to the recommended of three-member independent panel formed by the government.

“We have approved the project after the Chinese company agreed to revise the cost,” Acharya said, adding that the long-stalled airport construction will go ahead soon.

Earlier, suspecting financial irregularities Commission for Investigation of Abuse of Authority (CIAA) had seized the tender documents of the proposed regional international airport.

The CAAN’s approval will now help Finance Ministry sign a loan agreement with the China EXIM Bank. The government is going to borrow $145 million in soft loan from the China EXIM Bank to construct the airport under the Engineering Procurement and Construction (EPC) model.

On February 9, 2012, CAAN had invited bids for the project construction and three Chinese companies had shown interest for the construction of the regional airport in Pokhara under the EPC model. However, controversy regarding higher cost has put the project on hold since July 2012.

The lowest bidder China CAMC had quoted $ 305 million – some 85 per cent higher than the government-estimated cost of around $ 166 million.

Though, the CAMC agreed to construct the airport at the government-estimated cost in January 2013, China Airport Construction Company – a consultant appointed by China CAMC – submitted a study report to CAAN quoting an estimated price of $ 264 million, adding 16 per cent price escalation and 13 per cent VAT that would sum up to almost $300 million.

The delay has made the project $50 million costlier due to price escalation and rising inflation.

The government had acquired more than 3,106 ropanis of land for the construction of airport in 1975. In the current fiscal year too, the government has allocated Rs 1 billion for additional land acquisition as the project needed 500 ropanis more.

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