KEDAR DAHAL
KATHMANDU, June 4
The Nepal Airlines Corporation (NAC) spends almost half its income from Chinese planes on insurance. Insurance companies have not stopped charging high insurance premium despite the NAC urging the Chinese side to reduce high insurance fee.
The NAC is currently doing insurance with a British company through the Rastriya Beema Sansthan. Insurance companies charge high premium from Chinese planes due to higher risks involved. The Chinese side is ready to provide spare parts, training and pilots but is evading the issue of reducing insurance premium. The NAC had initially urged to reduce premium by April 25 and has now extended the deadline by three months after the Chinese side refused. The NAC has made it clear that it will not be able to pay premium after that.
The NAC has been paying just 0.55 percent in premium for its new Airbus A320 planes, and 1.5 percent for Boeing 757s but has been paying 4.47 percent for its MA-60 brought from China. It comes out to Rs 246,000 a day. “We can pay premium on a good day when we earn up to Rs 700,000 a day from the Chinese plane. We are in loss otherwise,” NAC Spokesperson Ram Hari Sharma said. “We have been urging the Ministry of Culture, Tourism and Civil Aviation repeatedly to talk about the issue of insurance,” he added. The NAC pays over Rs 91 million for insurance of MA-60 every year and around Rs 30 million for Y-12. “The Chinese do not want to talk about the issue of insurance which is our main problem,” he stated.
The NAC board had written to the ministry in February to hold dialogue with the Chinese side stating that insurance premium of Chinese planes is high and flight capacity low. Issuing the deadline of April 25 it had said that agreement for the other four Chinese planes will be revoked and the two planes returned if the problem were not resolved.
MA-60 was brought on April 27, 2014 while 18-seater Y-12 arrived on November 3, 2014. The former had started flights from June 25, 2014 and the latter from December 18 that year. China had given the two planes in grant and will provide three Y-12 and another MA-60 in soft loan. The NAC complains that the Chinese manufacturer has been charging exorbitant rate for spare parts and has been urging the manufacturer to provide spare parts, training and pilots, and reduce price. It claims that a US$ 250-spare part of the Twin Otter, currently in operation, costs up to US$ 800 for MA-60.
China has provided Rs 6.67 billion to the NAC through Export Import (Exim) Bank of China in grant and soft loan to procure the six planes. Rs 2.94 billion out of that is grant for an MA-60 and Y-12 each, and the rest soft loan for the remaining four planes.
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