China CAMC Engineering, the contractor for the Pokhara Regional International Airport, has strongly rejected a report by a subcommittee of Nepal’s Public Accounts Committee (PAC), which alleges significant irregularities in the airport’s construction. The Chinese state-owned enterprise criticized the report for being riddled with factual inaccuracies and lacking professional, objective analysis of the project’s implementation.
Calling the report profoundly shocking and gravely concerning, the company stated: “As a professional and responsible international engineering contractor, we strictly complied with all legal and regulatory requirements of the Nepal government throughout the bidding, contracting, and implementation phases.”
The PAC subcommittee, chaired by Rastriya Prajatantra Party (RPP) Chairman Rajendra Lingden, concluded that irregularities and corruption worth approximately Rs 10bn occurred during the airport's construction. The draft report outlines discrepancies across 11 categories. Several subcommittee members have signed the draft, which is now being circulated among lawmakers for review.
The alleged irregularities in the airport construction could be among the largest corruption scandals in Nepal’s history. According to the subcommittee, the cost of the airport—originally estimated at
Rs 14bn—was suspiciously inflated to Rs 22bn. The report alleges widespread malpractice affecting nearly all aspects of the project, raising serious concerns about quality control and regulatory compliance. It also highlights violations of the original contract terms, particularly regarding tax exemptions. The report states that a new implementation agreement enabled repeated tax waivers totaling Rs 2.22bn, which it describes as “deliberate financial misconduct,” resulting in significant revenue loss for the state.
Reacting to CAMC’s rebuttal, a member of the subcommittee expressed concern over the company’s statement and said the committee would respond formally after internal deliberations.
Despite the controversy, CAMC said the airport is Nepal’s most modern international airport. The company added that the airport has operated stably for 28 consecutive months, with passenger traffic reaching 904,771 in 2023 and 989,852 in 2024—both exceeding its designed annual capacity of 800,000 passengers. It has also urged the Nepali authorities to investigate the unauthorized disclosure of the report, correct its alleged inaccuracies, and restore the truth.
Pokhara International Airport was inaugurated on 1 Jan 2023, amid considerable fanfare. Though the project predates Nepal’s entry into China’s Belt and Road Initiative (BRI), China later included it within the BRI framework, erupting a diplomatic brouhaha between Nepal and China. The airport was constructed under a soft loan from China, but it is currently failing to generate enough revenue to repay the loan.
The airport faces an annual interest payment of $3.2m. Officials say it would need to generate at least Rs 1.5bn annually just to sustain operations. Even if operated at full capacity, the income would likely be insufficient to cover both operating costs and loan repayments. Some economists argue no proper homework was done to assess the operational side of the airport.
In 2014, Luo Yan, chairman of the China CAMC Engineering Co Ltd, and Ratish Chandra Lal Suman, director-general of CAAN, had signed a contract worth $215.96m for the construction of the airport. On 21 March 2016, China Exim Bank and the Government of Nepal signed a government concessional loan (GCL) agreement worth RMB 1.37bn for the project development.
According to AidData, a Washington DC-based research lab, 25 percent of this loan (RMB 355.9m) was interest-free, with a 20-year maturity and a seven-year grace period. The remaining 75 percent (RMB 1.02bn) carried a two percent interest rate, with the same maturity and grace terms. The AidData report also notes that Nepal on-lent the loan proceeds to CAAN through a Subsidiary Loan Agreement finalized on 5 June 2016 at a five percent interest rate, with identical repayment terms.
