Govt to appoint IFC as ‘advisory’ for Gautam Buddha Int’l Airport

Kathmandu, August 19

The government is preparing to appoint the International Finance Corporation (IFC) as the transaction advisory service provider for the Gautam Buddha International Airport Project (GBIAP).

As the government has been planning to operate the yet-to-be upgraded international airport in Bhairahawa as per the public private partnership (PPP) model, the World Bank Group member IFC had submitted a proposal to the government expressing its willingness to deliver the aforementioned service on grant.

Pradip Adhikari, director at the Civil Aviation Authority of Nepal (CAAN), informed that the proposal of IFC has been sent for approval to the Ministry of Culture, Tourism and Civil Aviation (MoCTCA) and the Ministry of Finance (MoF).

In the context of Nepal not having the experience of entrusting airport operation to the private sector, Adhikari said that IFC’s proposal is contextual as it has pledged to provide consultancy service to bring in an appropriate private operator for the Bhairahawa-based international airport.

“Once the proposal gets a nod from MoCTCA and MoF, CAAN will sign financial advisory service agreement with IFC,” said Adhikari.

As per CAAN, the transaction advisory service provider acts as a third-party service provider and will help the government to prepare bid documents, announce related tender notices and select appropriate private party to operate the airport. “The role of service provider starts from preparing necessary bid documents to bringing in an appropriate private operator for Gautam Buddha International Airport,” added Adhikari.

If the government gives operational responsibility of the Gautam Buddha Airport to a private party, all airport activities except air traffic control,
security, customs and immigration will be under the selected private firm’s jurisdiction.

MoCTCA is for giving the operational responsibility of the international airport in Bhairahawa to the private sector especially in the backdrop of the current state of airports, including Tribhuvan International Airport (TIA) questioning the ability of the government to run airports competitively.

The proposed Integrated Civil Aviation Bill has envisioned allowing the private sector to build and operate airports.

Meanwhile, the National Planning Commission (NPC) had recently suggested the government to induct domestic or foreign investment under the PPP model for the GBIAP.

Being funded by the Asian Development Bank (ADB), the Gautam Buddha Airport upgradation project, which began in 2013, has so far achieved 50 per cent physical progress and the government plans to operate this international airport by July 2019.

Along with TIA, the sole international airport in the country, failing to withstand the increasing air traffic pressure, operation of an international airport in Bhairahawa is expected to ease the air traffic congestion.

Of the estimated project cost of Rs 6.22 billion, ADB and OPEC Fund for International Development (OFID) have provided $58.5 million and $15 million, respectively for the upgradation of Gautam Buddha Airport. CAAN will have to inject the remaining amount for the project.