The Accountant General had considered the customs duty and VAT exemptions given to the company by the then government during the construction of the airport as irregularities and had set aside Rs 2.224 billion in the name of the Civil Aviation Authority.
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The undeclared amount of Rs 2.224 billion in customs and value-added tax (VAT) exemptions granted during the construction of the Pokhara Regional International Airport will now be deducted from the outstanding payments to the contractor company.
The Civil Aviation Authority of Nepal (CAAN) has decided to deduct the amount from the remaining amount to be paid to China CAMC Engineering Company Limited in a meeting held on Kartik 13, 2082. The authority has sent this decision to the Ministry of Culture, Tourism and Civil Aviation, after which the way has been opened for settlement of the irregularity through the Ministry of Finance.
The Office of the Auditor General had considered the customs duty and VAT exemption given to the company by the then government during the construction of Pokhara Airport as an irregularity and established an irregularity of Rs 2.224 billion in the name of the Civil Aviation Authority of Nepal.
In the 60th Annual Report (2079) of the Auditor General, it was made clear that exemptions cannot be given to any Nepali or foreign construction company on the grounds that it has to pay its taxes and fees. Then, the legal branch of the authority concluded that, in accordance with Section 39 of the Financial Procedures and Financial Responsibility Act 2079, the irregularity can be settled by deducting the equivalent amount from the payment due to the construction company.
The Accountant General had given an opinion that such a discount should not be given, saying that there was no provision for discount in the contract agreement. However, it was seen that the Pokhara International Airport Project Office later included the company in the master list and granted customs and duty discounts.
Now, a letter will be sent to China Exim Bank through the Ministry of Tourism through the Ministry of Finance to implement the decision. The government currently has a total of 3.49 billion 9.45 billion rupees remaining, including payments and deposits, from the company.
Finance Minister Bishnu Poudel had written to the then Minister of Culture, Tourism and Civil Aviation Badri Prasad Pandey in 2082 Ashar in this regard and directed him to settle the outstanding amount as per the act. After that, the ministry had given secretary-level instructions to the NEA on 18 Ashar to proceed with the necessary work.
The Government of Nepal had started the construction of Pokhara International Airport in collaboration with China in 2012. In 2014, the then Director General of the NEA, Ratish Chandra Lal Suman, had signed a contract agreement worth 22 billion rupees with China CAMC Engineering Company Limited. The loan and contract agreement for the project was signed during the tenure of the then Prime Minister Sushil Koirala. The supplementary agreement on customs and VAT exemption was signed between the Ministry of Finance, the Civil Aviation Authority of Nepal, and China's Exim Bank.
The agreement was attended by the then Director General of the Authority, Sanjeev Gautam, Joint Secretary of the Ministry of Finance, Kebal Prasad Bhandari, and Deputy Director General of Exim Bank, Gao Ning.
