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Above 5 billion rupees over-invoicing in purchase of two wide-bodied aircraft

By Our Reporter
Previously, the Nepal Airlines Corporation (NAC) had purchased two narrow bodied Airbus aircrafts directly from the manufacturer, therefore the deal was considered to be transparent. However, the present general manager Sugatratna Kangsakar and his management team have decided to purchase two wide bodied aircraft from a third party with the plan of amassing hefty amount of money from the purchase deal.
Thus, while purchasing the two wide-body Airbus aircraft, the NAC Management has decided to receive aircrafts from the broker agencies and some of the companies were established only after the tender was called by NAC. Also, the NAC management has sent money to the broker agency with the aim of sharing a hefty amount of commission to be received from the purchase deal.
As described the previous week in this Weekly, we have reported that NAC had created three companies to procure the wide-body aircrafts by avoiding a direct deal with the manufacturing company. However, the NAC management didn’t wish to send money directly to these three companies involved in the supply of the aircraft, but a new agent Northern Rose Fulbright was created and a new account was opened at the Uni-Credit Bank for financial deals during the purchase of the aircrafts. This account is learnt to be operated by those brokers with the aim of sharing commission. Money sent to purchase the aircrafts will be deposited in this bank and the three suppliers and NAC officials will share their commission and rest of the amount, i.e. real price for the aircraft will be sent to the account of the Airbus.
As the money was deposited at the brokers’ account, NAC has not yet received any receipt for the first installment worth 8 billion rupees sent ten months ago. NAC had sent 1 million US $ in this account as commitment fee.
Cases have been filed at the Public Accounts Committee in the Parliament and also in the CIAA in the purchase process of the aircrafts which amounts to about 22 billion rupees (US $104.8 million).
Due to the general elections, the Public Accounts Committee’s investigation was affected, however, the CIAA has issued a press release stating that the CIAA investigation is on regarding the purchase deal of the two wide-body aircrafts.
NAC has mentioned the price of the aircrafts along with their engines. What about the after sales service, warranty and guarantee, on these matters the NAC is silent.
Sources claim that the High-Fly Transport Aeros Company has inked for an agreement with the Airbus Company to purchase the aircraft at the price of about 94 million US dollars, however, in association with NAC, the brokers have increased the price by 17 million US dollars in each aircraft. In this way, NAC is going to pay additional 3 billion 400 million rupees to the brokers along with 10 percent commission i.e. 2 billion rupees. In total, the commission amount wills be 5 billion rupees, which will go to the pockets of brokers and high-ranking NAC officials.
NAC had made public the tender in September 2016. If NAC had inked the purchase agreement with the Airbus, it would have received aircrafts earlier and also at a cheaper price. But High-Fly Portugal has booked the aircrafts only on 21 June, 2017, which is supposed to be delivered to NAC.
More interestingly, on 3 April, NAC General Manager Sugatratna Kangsakar, addressing a press conference, informed that NAC has decided to give responsibility to the Rolls-Royce Company for maintenance and servicing of the four engines of the new aircrafts for 12 years. The question is whether the Airbus Company will not provide after sales service! At least for two years, the Airbus Company is responsible for providing after sales service.

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