The new general manager had initiated the stalled payment process, and the Israeli company had sent an email on October 20 informing it of the cancellation of the contract, alleging that it had not paid the outstanding balance of more than Rs 420 million for the engine it was leasing.
What you should know
The dispute that arose about two years ago over the repair of two engines of Nepal Airlines Corporation's Lumbini narrow-body aircraft and the leasing of one is now moving towards resolution. The dispute is likely to be resolved after the new General Manager Amritman Shrestha moved forward with the long-stalled payment process.
Earlier, Executive Chairman Yubaraj Adhikari had stopped payments related to engine repairs and rentals. Then, Janakraj Kalakheti, Senior Director of the Corporation, who was appointed as the Acting General Manager by Prime Minister Sushila Karki, withdrew from the process, stating that he had no legal authority to make payments.
Meanwhile, the Israeli company Israel Aerospace Industries (IAI) had taken strict action and decided to cancel the contract after Nepal Airlines Corporation failed to pay despite repeated demands.
Information about the cancellation of the contract was sent via email on Kartik 5, accusing it of not paying the arrears of more than Rs 420 million for the engines it was renting.
After the situation arose that the Lumbini aircraft would be grounded immediately, Prime Minister Karki, who also looked into the Ministry of Tourism, became active in resolving the dispute.
In line with this initiative, the cabinet meeting held on Tuesday had removed Kalakheti from the post of acting general manager and appointed Amritman Shrestha, a member of the corporation's board of directors, as the general manager and given the responsibility of resolving the dispute. Shrestha has taken important decisions towards resolving the dispute on the first day after receiving the letter from the general manager. According to him, the payment of Rs 290 million, which had been stalled for one and a half years for the repair of the first engine, has been moved forward.
Similarly, he informed that it has been decided to renew the LC that was already opened for the repair of the second engine (about Rs 940 million) and restart the process. After the LC is renewed, the second engine, which was repaired six months ago, will be sent to Nepal.
Meanwhile, representatives of the Israeli company are preparing to visit Nepal soon. They and Nepal Airlines Corporation are expected to sign an agreement on returning the engines being used on lease, receiving the corporation's own engines that have been repaired, and determining the basis for a discount or agreement on the remaining amount.
The Israeli company has claimed at least Rs 400 million for the leased engines. However, discussions are ongoing between both parties on adjusting the amount and possible discounts.
Meanwhile, the new General Manager held a management meeting with all directors at New Road on Thursday evening. In the meeting, the then Chairman Yubaraj Adhikari said that the decision was made at the corporation headquarters on Thursday to remove the contract employees hired when his term ended, to proceed with the contract process for overhauling four engines of two wide-body aircraft, and to repair and operate the corporation's third twin-engine aircraft.
