Pokhara International Airport Struggles with Corruption and Low Passenger Traffic

 KATHMANDU – Nepal’s plan to make Pokhara International Airport (PIA) a regional hub for international tourism has faced serious setbacks due to corruption and operational problems. Originally intended to boost tourism in the Annapurna region, the airport has instead become a symbol of financial mismanagement, poor construction, and complex geopolitical issues.


A parliamentary investigation revealed irregularities worth Rs 14 billion (around US$105 million), highlighting systemic flaws in Nepal’s infrastructure projects. Launched in 2013 and opened in January 2023, the project cost Rs 22 billion (US$216 million), funded mainly through a 20-year loan from China’s Export-Import Bank, with additional support from the Asian Development Bank and the OPEC Fund. A Chinese state-owned firm handled construction under an EPC model.


Key issues include:


Financial mismanagement: Costs were inflated through fake payments, including US$5.5 million for soil transport that never happened. The Civil Aviation Authority of Nepal (CAAN) granted unauthorized exemptions on duties and taxes, providing undue benefits to the contractor. Payments were made for incomplete infrastructure, including fuel facilities and HVAC systems.


Administrative failures: Construction began before consultants were appointed, and a Nepali consultancy was selected without competitive bidding. CAAN failed to enforce contract compliance, allowing the contractor to cut corners.


Geopolitical challenges: India has restricted flight routes over its airspace, limiting PIA to just one weekly international flight (Pokhara-Lhasa), reducing revenue and making the airport a financial burden. The US$216 million loan has added economic strain.


The CIAA (Commission for the Investigation of Abuse of Authority) and parliamentary panels continue to investigate, but access to key documents has been difficult, raising concerns over transparency and potential political complicity. Meanwhile, CAAN maintains that the airport meets international standards and denies evidence of corruption, though critics remain skeptical.


The PIA scandal highlights broader challenges in Nepal’s infrastructure development, including financial irregularities, technical shortcomings, and misalignment with economic and diplomatic priorities. Experts stress that without stronger governance, anti-corruption measures, and transparent procurement, Nepal risks further economic losses and declining public trust in future development projects.

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