Nepal's Auditor General Office has released its annual report and once again called out the failure of Nepal Airlines (RA, Kathmandu) to properly service loans made by the Employees Provident Fund (EPF) and the Citizen Investment Trust (CIT) for the purchase of aircraft.
The report, released on May 14, 2025, said Nepal Airlines now owes NPR28.57 billion rupees (USD209 million) to the EPF stemming from a 2017 loan to buy two A330-200s and NPR19.39 billion (USD141.5 million) from a 2015 loan from CIT to acquire two A320-200s. The original loan amounts were for NPR11.99 billion (USD87.5 million) and NPR9.98 billion (USD73 million), respectively. But because Nepal Airlines has failed to service the loan principal and interest payments regularly, the lenders have capitalised the debt, and it has grown.
The Auditor General's Office criticised the irregular repayment pattern and the failure of both lenders (state-owned pension funds) to enforce a regular repayment regime. In October 2024, Nepal Airlines said it had repaid NPR6.3 billion (USD46 million) of the amount owed and had requested the EPF and the CIT to waive interest, damages, and penalties accrued during the pandemic and assist the process by increasing the number of instalments. That request was ultimately unsuccessful.
Last month, Nepal Airlines issued a press release saying it had met its NPR539.55 million (USD3.95 million) monthly repayment obligation for the two A320s. It also paid NPR281 million (USD2 million) towards the A330 debt, only a portion of the agreed monthly repayment. Nonetheless, repayment of any money at all was cause for a press release. As of April, Nepal Airlines said it had paid an aggregate NPR7.39 billion (USD54 million) towards settling its loans.
Meanwhile, Nepal Airlines has returned both its DHC-6-300s to service, allowing the airline to resume domestic flights. 9N-ABU (msn 814) began flying again last month after months on the ground. Earlier this week, 9N-ABT (msn 812) resumed flights after 11 months out of service.
