KATHMANDU: Pokhara International Airport, inaugurated in January 2023 by then-Prime Minister and current leader of the main Opposition, CPN (Maoist Center) Prachanda, was celebrated as a symbol of Nepal’s expanding connectivity and international aspirations. Built with a $215.96 million loan from China’s Exim Bank under the Belt and Road Initiative (BRI), the airport was meant to serve as a gateway to western Nepal and relieve pressure on Kathmandu’s Tribhuvan International Airport. However, within a year of its operation, the airport has become mired in controversy. A detailed report by the parliamentary sub-committee under the Public Accounts Committee (PAC), made public in April 2025, has exposed serious financial irregularities and procedural lapses. The report accuses the Civil Aviation Authority of Nepal (CAAN) of corruption, collusion, and negligence during the planning, procurement, and construction phases of the project. It raises questions about inflated costs, flawed agreements with Chinese contractors, bypassing of regulatory requirements, and lack of proper feasibility studies. Despite the project’s strategic importance, the airport remains underutilized, with no regular international flights and mounting debt obligations. The controversy not only highlights governance failures in Nepal’s infrastructure sector but also casts a shadow over Nepal’s participation in Chinese-led development initiatives. This explainer breaks down the key findings of the report, the nature of the corruption, and the implications for Nepal’s future infrastructure projects.
What does the House Public Accounts Committee report say about the Pokhara Airport construction project?
The parliamentary sub-committee under the Public Accounts Committee (PAC) report, tabled in April 2025, uncovers serious corruption and mismanagement in the Pokhara International Airport project. The sub-committee found that the Civil Aviation Authority of Nepal (CAAN) violated procurement norms, signed unfavorable contracts, and manipulated cost estimates to benefit Chinese contractors. The report accuses CAAN of deliberately inflating the cost of the airport, which ballooned to $215.96 million, and failing to conduct proper feasibility studies and environmental assessments before beginning construction. It reveals that CAAN colluded with China CAMC Engineering Co. Ltd.—the contractor selected without open international bidding—under terms that favored the contractor at Nepal’s expense. The PAC report notes that the Detailed Project Report (DPR) was approved only after the construction contract was signed, violating standard international procedure. Further, it points out that the project agreement lacked independent third-party cost verification, and the entire process was marked by a “take-it-or-leave-it” approach from the Chinese side. The PAC concludes that this negligence was not accidental but intentional, and recommends further investigation and accountability for officials involved in the decision-making process. The findings have sparked national debate on corruption in infrastructure development and the risks of opaque foreign loan agreements.
How much financial irregularity was reported, and who were the key actors involved?
The PAC report identified financial irregularities worth approximately Rs 14 billion (around USD 106 million) in the construction of Pokhara International Airport. These irregularities stem from inflated procurement costs, flawed contracting practices, and deliberate negligence in financial oversight. The report names China CAMC Engineering Co. Ltd., the Chinese state-owned contractor, and officials from the Civil Aviation Authority of Nepal (CAAN) as the principal actors behind the corruption.
One of the most damning findings is that CAMC Engineering submitted a project proposal and feasibility study after the contract was already signed. Despite this, CAAN approved the DPR retroactively, and no competitive bidding was held. The contract’s terms were dictated by CAMC, including material procurement and equipment purchase, with Nepal having no say in price evaluation. PAC described this as a “take-it-or-leave-it” approach, allowing the contractor to dominate the entire financial and technical planning process.
Moreover, key officials within CAAN are alleged to have colluded with the contractor. Several top bureaucrats reportedly facilitated non-transparent payments and failed to enforce accountability. The PAC has recommended that the Commission for the Investigation of Abuse of Authority (CIAA) investigate individuals who oversaw project planning between 2014 and 2023. The report also hints that higher-level political patronage may have shielded those responsible, although names of ministers were not directly mentioned.
Irregularities also include overpayment for airport equipment such as radars and communication tools, some of which still remain unused. In some cases, the Chinese supplier subcontracted Nepali intermediaries to deliver equipment at prices far above international market value.
The total irregularities of Rs 14 billion amount to roughly two-thirds of the total project cost, raising serious questions about Nepal’s institutional capacity to manage foreign-funded infrastructure. The airport was financed entirely through loans—primarily from China’s Export-Import Bank—meaning Nepali taxpayers will ultimately bear the burden of this mismanagement.
Who are the key officials named for investigation?
The parliamentary report on the corruption and irregularities in the construction of Pokhara International Airport has found that the Civil Aviation Authority of Nepal (CAAN), which was responsible for overseeing the project, was directly involved in the mismanagement. As a result, the Lingden-led study panel has called for immediate suspension and further investigation into several high-ranking officials within CAAN.
Pradeep Adhikari
The panel has suggested suspending Pradeep Adhikari, the Director General of CAAN, who served as the project head from 2014 to 2017. Adhikari, who was responsible for overseeing the project during its critical phases, is being investigated for his role in the corruption and mismanagement of the Pokhara airport project. The investigation will delve into his decisions, actions, and the potential negligence or direct involvement in enabling the corruption.
Sanjeev Gautam and Rajan Pokharel
Former Director Generals Sanjeev Gautam and Rajan Pokharel have also been named for further investigation. Both officials were at the helm of CAAN at different times during the airport’s construction and are suspected of being complicit in the irregularities and mishandling of funds related to the project. The panel’s recommendation calls for a thorough inquiry into their involvement and possible administrative failings.
Binesh Munakarmi and Baburam Poudel
The report has also singled out Binesh Munakarmi, who served as the head of the Pokhara airport project, and Baburam Poudel, a director at CAAN. Both individuals are under investigation for their roles in the alleged embezzlement and corruption that took place during the project’s execution. Following their suspension, the panel has urged for a detailed probe to determine the extent of their involvement in the wrongdoing.
Chandmala Shrestha and Prabin Neupane
The report further calls for investigations into Chandmala Shrestha and Prabin Neupane, directors involved in national pride projects, who may have played a role in the irregularities surrounding the Pokhara airport construction. Their involvement in the financial mismanagement and failure to address discrepancies in the project is under scrutiny.
Rajendra Prasad Poudel
Lastly, Rajendra Prasad Poudel, the administrative chief of national pride projects, is also implicated in the investigation. As a key figure responsible for overseeing CAAN’s administrative processes, his role in the corruption is being examined to understand how the project’s operations were allowed to proceed without adequate checks and balances.
What procurement and contract violations were committed during the airport’s development?
The parliamentary sub-committee under the Public Accounts Committee details a series of blatant violations of Nepal’s Public Procurement Act and international best practices during the construction of Pokhara International Airport. One of the most serious violations was the signing of the construction contract before the Detailed Project Report (DPR) was prepared and approved. This reverses the standard practice of first conducting feasibility studies and then inviting international bids based on transparent parameters.
Instead, China CAMC Engineering submitted the DPR after receiving the contract, effectively drafting its own scope of work, budget, and timeline without independent oversight. The report states that no third-party cost verification was conducted, even though the Public Procurement Act mandates such procedures for large-scale infrastructure projects.
Furthermore, the project was awarded through government-to-government negotiation without competitive bidding, which was only possible because of a cabinet-level decision to designate it as a “national pride” project under special circumstances. However, this designation was later criticized as being misused to bypass transparency and tender requirements.
The contract’s financial model was also lopsided. Although labeled as a loan agreement from China’s Exim Bank, it came with strict conditions: the loan had to be used to hire Chinese contractors and purchase Chinese-made equipment, many of which were significantly overpriced. Nepal’s input was limited, and the CAAN was obligated to accept CAMC’s specifications without negotiation.
In terms of procurement, the PAC found that several items—including air traffic control systems, runway lights, and navigational aids—were procured at up to 300% above market value. Despite clear evidence of cost manipulation, no effort was made to renegotiate or re-evaluate these contracts. These procedural violations not only caused financial loss but also set a dangerous precedent for other infrastructure projects, especially those involving bilateral loans.
What role did Chinese contractor CAMC Engineering play, and how did Nepal’s institutions enable them?
China CAMC Engineering Co. Ltd., a state-owned enterprise under Sinomach (China National Machinery Industry Corporation), was the main contractor for Pokhara International Airport. The PAC report alleges that CAMC dictated the terms of the project from the outset, benefiting from a non-competitive, sole-sourced contract, and a Nepalese institutional environment that either failed to resist or actively enabled their overreach.
CAMC was awarded the construction contract in 2014 under a government-to-government framework agreement, which bypassed Nepal’s open bidding norms. Once selected, CAMC submitted its own project documents, including the DPR, cost estimates, and material requirements. These were approved by the Civil Aviation Authority of Nepal without independent assessment. This effectively gave CAMC free rein to determine how much the project would cost and how it would be executed.
The contractor also insisted that all equipment and subcomponents be sourced from Chinese suppliers, many of whom charged rates far above international norms. CAMC’s pricing for airfield lighting systems, navigation instruments, and radars, for example, was found to be two to three times higher than market averages. Several of these systems were not even operational at the time of the PAC investigation.
Nepal’s failure to enforce contractual obligations allowed CAMC to escape scrutiny. For instance, deadlines were frequently extended without penalty, and there was no enforcement of quality standards. One glaring example is the radar system, which remained unused for over a year after airport inauguration due to unresolved calibration issues.
The PAC criticized CAAN’s passive oversight and called out the project management team for rubber-stamping CAMC’s demands. Political leaders and bureaucrats, instead of safeguarding Nepal’s interests, facilitated CAMC’s dominance in project execution.
This dynamic reflects a broader pattern seen in BRI-funded projects across South Asia, where Chinese contractors operate with minimal accountability in politically weak governance environments. In Nepal’s case, CAMC was not only allowed to write the rules—it also got away with breaking them.
Why is Pokhara International Airport not operating international flights despite its inauguration?
Although officially inaugurated on January 1, 2023, Pokhara International Airport has yet to host regular international flights, defeating its core purpose. The PAC report and aviation experts identify a combination of technical flaws, mismanagement, and poor strategic planning as key reasons behind this failure.
One major issue is the lack of international certification. The airport still lacks full ICAO (International Civil Aviation Organization) certification required for major international operations. Furthermore, its radar and navigation systems were found to be either substandard or non-functional during testing, making it difficult for international carriers to trust the airport’s safety and communication protocols.
Another obstacle is the absence of a bilateral air service agreement (BASA) with major countries, especially India. Although Nepal has requested additional flight routes into Indian airspace, the Indian side has not yet approved direct flight paths over Butwal and Bhairahawa, which are essential for economically viable routes from Pokhara. Without these routes, international airlines face increased fuel and time costs, discouraging them from adding Pokhara to their schedules.
Additionally, the airport’s runway length (2,500 meters) is considered insufficient for long-haul international flights using wide-body aircraft. There are also no dedicated cargo or maintenance facilities that could attract regular airline operations. Tourism operators in Pokhara have also complained about a lack of marketing and coordination from the Nepal Tourism Board and CAAN to attract foreign airlines.
Lastly, the debt burden from the Chinese loan adds pressure to generate revenue, yet without flights, the airport is a financial liability. As of early 2025, only occasional chartered flights have used the facility. Even domestic airlines prefer Pokhara’s older domestic airport due to logistical convenience.
This failure to attract international flights not only makes the entire investment questionable but also highlights the mismatch between infrastructure aspirations and planning realities in Nepal’s aviation sector.
What were the issues with the airport’s radar and equipment procurement?
The PAC report revealed alarming discrepancies in the procurement of radar systems, navigation equipment, and communication infrastructure for Pokhara International Airport. Many of these systems were either non-functional at the time of inauguration or procured at grossly inflated prices, suggesting both technical negligence and financial misconduct.
One of the most critical issues was with the radar system, which remained unused for several months post-inauguration. The radar was procured from a Chinese supplier through CAMC Engineering without any independent technical evaluation or compatibility testing. Aviation experts have flagged that the system failed to pass calibration and performance checks during initial trials. The equipment lacked seamless integration with Nepal’s broader air traffic management network, making it unsafe for international flight operations.
The navigational aids, including Instrument Landing Systems (ILS), Very High Frequency (VHF) communication units, and Doppler VHF Omnidirectional Range (DVOR) systems, were also found to be of lower capacity and incompatible with global aviation standards. These tools are essential for safe aircraft landing and communication, especially during low visibility or emergencies. The PAC report highlighted that several of these devices were installed improperly or failed to meet operational criteria.
Financially, the equipment was purchased at two to three times the international market rate. For example, the radar system, which should have cost around Rs 250 million, was billed at over Rs 700 million. Similar price inflation was observed for lighting systems, runway beacons, and radio towers. In some cases, items were procured but not installed at all, or remained in storage for months, raising concerns about phantom billing and supply chain fraud.
CAAN officials approved all these procurements without conducting market benchmarking or seeking alternate quotes. The PAC criticized this as a deliberate bypassing of procurement norms. Moreover, the contract terms handed over complete control to CAMC and its chosen Chinese suppliers, stripping Nepal of any real oversight.
The poor procurement choices not only resulted in a waste of public money but also directly hindered the airport’s functionality. As a result, the airport remains underutilized, and international carriers have expressed reluctance to use a facility lacking basic aviation safety equipment.
How has the airport’s underutilization affected Nepal’s aviation and tourism sectors?
The underutilization of Pokhara International Airport has had a significant negative impact on both Nepal’s aviation and tourism sectors. Despite being touted as a game-changing infrastructure project meant to decentralize air traffic from Kathmandu and boost tourism in the Gandaki region, the airport remains largely idle more than a year after its inauguration in January 2023. The airport was designed to accommodate international flights and act as a major gateway for foreign tourists visiting destinations like the Annapurna Circuit, Mustang, and Phewa Lake. However, as of early 2025, no major international airline operates regular scheduled flights to and from Pokhara.
Several factors have contributed to this underuse. First and foremost is the absence of a functional radar and navigation system, which severely limits the airport’s ability to handle international air traffic, especially under poor weather conditions or during night hours. Airlines are hesitant to operate in an environment that lacks internationally recognized safety protocols. Second, the airport has failed to obtain a full Category-C certification from international aviation authorities, meaning that carriers have concerns about operational safety, ground handling services, and emergency preparedness.
The lack of regular international flights has kept tourist arrivals in Pokhara at pre-airport levels, despite increased expectations from stakeholders in the hotel, trekking, and transportation industries. This has undercut the economic rationale for the project. Local businesses that invested in anticipation of a tourism boom are facing losses, and employment generation from the project has remained minimal. Tourism operators say the airport’s failure to attract foreign airlines has had a “demoralizing” effect, especially given the large public expenditure and international loans incurred for its construction.
For Nepal’s aviation sector, the underutilization represents a missed opportunity for regional hub development. Nepal’s domestic aviation is concentrated heavily in Kathmandu’s Tribhuvan International Airport (TIA), which is already operating beyond its capacity. Pokhara was expected to alleviate some of that pressure, but its dormancy has only highlighted Nepal’s inability to diversify air traffic management. The duplication of functions and misallocation of resources between Pokhara, Bhairahawa’s Gautam Buddha International Airport, and TIA is now a growing concern, especially since all three airports were developed with external funding but remain underperforming.
Moreover, underutilization affects Nepal’s negotiating power with international airlines. Without a proven record of passenger volume and service reliability at Pokhara, airline companies see no incentive to reroute or initiate services. These further delays potential revenue generation and puts more strain on Nepal’s already stretched aviation regulatory apparatus. In essence, the airport’s low usage has become a symbol of misplaced priorities, poor project planning, and the failure to align infrastructure investments with ground realities and sectoral preparedness.
How did political decisions and cabinet approvals enable corruption in the project?
Political maneuvering played a central role in enabling the procedural irregularities and large-scale corruption observed in the Pokhara International Airport project. The Cabinet of Nepal in 2014 passed a decision to implement the project under a “government-to-government” special provision, which exempted it from Nepal’s standard Public Procurement Act. This critical decision opened the door for non-competitive awarding of the contract to China CAMC Engineering, bypassing international bidding and cost scrutiny.
The PAC sub-committee report pointed out that this cabinet decision was framed as being in the “national interest,” leveraging the project’s designation as one of national pride. However, the move allowed CAMC to submit its own feasibility report and Detailed Project Report (DPR) after contract signing. Normally, such technical documents form the basis for competitive bidding, not follow the agreement. By greenlighting this retroactive DPR, the cabinet effectively endorsed a rubber-stamped process that locked Nepal into inflated costs.
Multiple ministers across different administrations continued to support and defend the project without raising concerns, despite mounting evidence of irregularities. There was a lack of parliamentary oversight during crucial decision-making phases, including loan negotiations with China Exim Bank. When concerns were raised in Parliament about overpricing and delayed delivery, they were either downplayed or dismissed under the pretext of diplomatic sensitivity.
In addition, the project’s cost rose by several billion rupees over time, and no one in the cabinet raised red flags or demanded third-party audits. Experts argue that political actors deliberately chose to avoid scrutiny, either due to geopolitical pressure or vested interests. The PAC report does not directly implicate individual ministers, but its tone suggests political protection enabled the contractor and bureaucrats to operate with impunity.
As a result, political decisions became the enabling framework for institutional weaknesses to flourish. The case demonstrates how politicized infrastructure planning, coupled with lack of accountability mechanisms, can turn even the most promising national projects into centers of corruption and inefficiency.
What are the implications of the Rs 22 billion Chinese loan Nepal took for this project?
The Pokhara International Airport was financed entirely through a concessional loan of Rs 22 billion (USD 215 million) from the Export-Import Bank of China, as part of the broader Belt and Road Initiative (BRI). However, the implications of this loan have turned increasingly problematic as irregularities in project execution come to light and the airport remains underutilized.
First, the loan is non-grant and commercially repayable, with an interest rate of 2%, a grace period of 7 years, and a maturity period of 20 years. As the airport has failed to generate the expected revenue from international flights, Nepal’s ability to repay this loan from airport earnings has been severely undermined. This means taxpayers will ultimately bear the repayment burden, placing additional stress on Nepal’s already strained public finances.
Second, the loan came with tied aid conditions. Nepal was compelled to hire a Chinese contractor (CAMC Engineering) and purchase Chinese materials and equipment, many of which were overpriced. This restricted Nepal’s ability to negotiate better prices or seek alternatives. The tied nature of the loan also led to procurement being driven by political and diplomatic considerations rather than technical merit.
Third, critics warn of a potential debt trap, a concern echoed globally in countries engaging in BRI projects. While Nepal’s external debt-to-GDP ratio remains below 40%, the concern is not just the size of the debt but the lack of returns from projects like this. If Pokhara Airport fails to operate international flights or become commercially viable, Nepal may have to restructure or refinance the loan, risking dependence on Beijing’s goodwill.
Finally, the loan has geopolitical implications. While officially outside BRI until 2023, the project is seen as a test case for Chinese influence in Nepal’s infrastructure sector. The inability of Nepal to manage the project transparently has raised questions about how Chinese loans are used and who really benefits from them—contractors, politicians, or the public.
What action has the Public Accounts Committee (PAC) recommended?
The sub-committee of the Public Accounts Committee of the House of Representatives, after completing its months-long investigation, has issued a series of strong recommendations in its final report released in April 2025. Chief among them is the call for the Commission for the Investigation of Abuse of Authority (CIAA) to launch formal investigations against officials of the Civil Aviation Authority of Nepal (CAAN) and others involved in the airport project between 2014 and 2023.
The PAC has specifically asked for:
Additionally, the PAC has proposed a systemic reform of future infrastructure project planning. It recommends that all major foreign-funded projects must have independent DPR validation, third-party cost audits, and parliamentary oversight before loan agreements are finalized.
Importantly, PAC has requested the Speaker of Parliament to prioritize debate on the report in the upcoming session and has submitted copies to the Prime Minister’s Office, Ministry of Finance, Ministry of Tourism and Civil Aviation, and the Office of the Auditor General.
However, whether these recommendations lead to real action remains uncertain. Past PAC reports have often been shelved without implementation. But given the scale of this scandal, and growing public frustration, this may become a litmus test for Nepal’s commitment to fighting corruption in mega infrastructure projects.
How has the Civil Aviation Authority of Nepal (CAAN) responded to the report?
The Civil Aviation Authority of Nepal (CAAN), which supervised the project, has responded defensively to the Public Accounts Committee’s report, rejecting key allegations and attributing project shortcomings to external factors. In multiple public statements, CAAN claimed that the procurement process followed legal procedures, and that price escalations were a result of “project scale and inflation” rather than corruption.
CAAN Director General Pradeep Adhikari dismissed the claim of Rs 14 billion in irregularities, calling it “based on flawed assumptions” and asserting that most equipment prices were pre-approved by technical committees. He also emphasized that the contract with CAMC was signed as part of a sovereign-level agreement between Nepal and China, suggesting that many conditions were beyond CAAN’s control.
However, this defense has failed to satisfy aviation experts and civil society. Critics argue that CAAN abdicated its oversight responsibilities, allowing the contractor to dictate procurement terms, avoid scrutiny, and deliver subpar infrastructure. The PAC report directly accuses CAAN officials of failing to verify the DPR, avoid third-party audit, and not ensuring that equipment met ICAO standards.
Internally, CAAN has not taken visible disciplinary action against officials named in the PAC report. There are no public indications of suspension, investigation, or reform measures as of April 2025. Furthermore, CAAN has continued to push for new Chinese loans for other airport upgrades, prompting alarm that lessons have not been learned.
In its response to Parliament, CAAN suggested forming a technical panel to reevaluate the report’s findings, rather than accepting the recommendations for CIAA investigation. This has been perceived as a move to delay accountability and dilute the political impact of the scandal.
Overall, CAAN’s response has been marked by institutional deflection rather than introspection, reinforcing the perception that the same governance failures may be repeated in future infrastructure projects.
What does this scandal reveal about Nepal’s BRI engagements with China?
The Pokhara airport corruption scandal casts a long shadow over Nepal’s engagements under China’s Belt and Road Initiative (BRI). Though the airport was not initially signed under the BRI umbrella, China later promoted it as a flagship BRI project to highlight Nepal-China cooperation. This rebranding served geopolitical ends but also shielded the project from the scrutiny typically applied to publicly funded ventures.
The scandal reveals multiple weaknesses in Nepal’s BRI engagements. First, it shows the lack of due diligence in project selection and contractor appointment. Since BRI projects often come with tied financing, Nepal’s inability to conduct open bidding and ensure third-party oversight leads to cost inflation and quality compromise. Second, the political leverage associated with Chinese loans and firms seems to override normal accountability mechanisms, allowing corruption to flourish unchecked.
The Pokhara case also illustrates the geopolitical risks of debt dependency. With over Rs 22 billion borrowed from China for an underperforming airport, Nepal now faces a debt servicing burden without the corresponding economic return. The airport’s failure erodes public trust not just in Chinese-funded infrastructure but also in Nepal’s ability to negotiate and implement such projects transparently.
Lastly, the scandal has sparked broader calls for Nepal to reassess its BRI priorities. Policymakers and civil society are urging the government to prioritize transparency, feasibility studies, and independent audits before undertaking future BRI-linked projects. The Pokhara debacle may thus serve as a turning point in how Nepal approaches infrastructure diplomacy with global powers like China.
