Nepal’s Pokhara International Airport, a flagship project of China’s Belt and Road Initiative (BRI), has been embroiled in controversy and corruption allegations since its inception. The project, which was initially promoted as a BRI “flagship project”, has now become a symbol of failed strategy and financial burden for Nepal.
The project was financed through a BRI loan of $215. 96 million from China’s Exim Bank, with 25% interest-free and the rest at 2% annual interest. However, despite the strategic location of the airport as the gateway to the Annapurna Circuit and its budget, the airport has failed to attract scheduled international flights. Currently, it only operates a single weekly route to Lhasa, China.
The project has faced delays and controversies since it was first conceived in 1971. In 2011, a secret Memorandum of Understanding (MoU) surfaced, showing then-finance minister Barsha Man Pun’s private commitment to support China CAMC Engineering Ltd (CAMC) in securing the contract. This raised suspicions of favoritism towards Chinese firms aligned with Beijing’s financing requirements.
The bidding process in 2012 also raised doubts, as all three bids came from Chinese Exim Bank-approved contractors, despite Nepal’s estimate being significantly lower. After labor unions and anti-graft officials raised objections, the case was delayed for years before finally moving forward in 2014, with a revised cost of $215. 96 million being adopted in the contract.
However, investigations by the Commission for the Investigation of Abuse of Authority (CIAA) have revealed that the project was fraught with corruption and overvaluation. The graft agency has asked the court to recover Rs 8. 36 billion from each of the 56 defendants, the largest financial penalty it has ever sought. The final sentencing, however, is dependent on a court verdict.
The CIAA’s investigation found that committee members and senior bureaucrats misused their authority by endorsing cost estimates lacking technical justification and violating Nepal’s Public Procurement Act. Even academicians were involved, with three professors from Tribhuvan University’s Institute of Engineering accused of submitting a “technically baseless” report that recommended an increase in the project’s cost to $230. 06 million.
The charge sheet also revealed that CAMC and Nepalese officials used the committee’s recommendations to justify approving an inflated contract of $244. 04 million. Between August 2018 and February 2024, Nepal paid CAMC $224. 77 million, with $74. 34 million being identified as losses from overvaluation and fraudulent billing.
Among the 56 defendants charged are former tourism ministers Post Bahadur Bogati (deceased), Bhim Prasad Acharya, Deepak Chandra Amatya, Ram Kumar Shrestha, and former finance minister Ram Sharan Mahat.