A government inquiry into a $216 million international airport in Pokhara, Nepal, has uncovered “irregularities and corruption” involving officials and lawmakers, which allowed a Chinese state-owned contractor to neglect its obligations and charge for uncompleted work.
A 36-page report released by a parliamentary committee revealed that China CAMC Engineering Co., part of the state-owned conglomerate Sinomach, failed to pay taxes, did not adhere to project specifications, and utilized substandard construction practices due to corruption and inadequate oversight.
In 2023, reports indicated that CAMC inflated project costs and compromised Nepal’s quality control efforts, prioritizing its business interests over the project’s integrity. The Civil Aviation Authority of Nepal, responsible for overseeing the airport's construction, was reportedly hesitant to confront Beijing regarding this significant project.
The Pokhara airport, a tourist hub at the base of the Himalayas, has become a financial burden for Nepal, illustrating the risks associated with heavy borrowing from China for major infrastructure initiatives.
The airport was financed through a 20-year loan from the Export-Import Bank of China, which supports Beijing’s international development projects. Nepal is expected to begin repaying this loan with revenue generated from the airport, which opened in 2023 but has not met international passenger projections, currently serving only one weekly international route.
China has promoted the airport as a “flagship project” of its Belt and Road Initiative, a significant infrastructure campaign. However, Nepal has distanced itself from this designation due to the diplomatic complexities it poses with India, its neighboring rival for regional influence. India has not approved any international routes to Pokhara, a popular destination for Nepali travelers.
In August, Nepal’s communist government, led by K.P. Sharma Oli, who has close ties to Beijing, formally requested that China convert the airport loan into a grant. While Nepali officials expressed optimism about this request, no formal agreement was announced following a meeting between Oli and Chinese President Xi Jinping in November.
The parliamentary committee's report highlighted that CAMC did not complete essential tasks, such as runway excavation and construction of a fuel supply facility, despite contractual obligations. Additionally, the report noted that the Nepali civil aviation authority paid for items that CAMC failed to deliver.
Furthermore, the report indicated that Nepali authorities waived $16 million in taxes for CAMC, despite the contract requiring the company to pay customs duties and value-added tax on imported equipment.
Although the contract specified two runways, the airport currently operates with only one due to safety concerns regarding the second runway.
China’s Ministry of Foreign Affairs and CAMC have not responded to requests for comment regarding the findings.
Rajendra Lingden, who led the inquiry, described the situation as a “massive scale of corruption” and called for the punishment of the corrupt officials involved. The parliamentary committee has recommended suspending top officials at the aviation agency, including the current director general, due to concerns about potential document destruction related to the airport's construction.
A spokesman for Nepal’s aviation agency declined to comment on the investigation's findings.