With the delay of almost a year, the construction of Pokhara Regional International Airport has finally begun. Although the loan agreement was signed a year ago, the construction of Nepal’s third international airport was delayed due to several reasons.

The Export-Import (Exim) Bank of China has made around Rs 22 billion loan commitment for the Pokhara airport, effective after Nepal has met the set conditions for loan disbursement.

“Loan effectiveness has paved the way to disburse loan amount,” said Yugraj Pandey, undersecretary of the International Economic Cooperation Coordination Division, under the Ministry of Finance (MoF). “Now the project developer will be able to acquire 15 per cent of total project cost in advance.”

The government signed a $215.96 million soft loan agreement with China in March last year for construction of the regional international airport in Pokhara. China Exim Bank had agreed to provide 25 per cent of the loan interest-free and had set interest rate of two per cent per annum for the rest of the amount, with a payback period of 20 years.

After the loan agreement was signed during the then prime minister KP Sharma Oli’s visit to China last year, the China Exim Bank had asked for the procedural design of the airport and other related documents to make the loan effective.

China CAMC Engineering Company, a Chinese construction firm, has already started construction works of Pokhara Regional International Airport. The firm was awarded the construction contract of Pokhara airport in May 2014.

Pradip Adhikari, chief of the airport project, said that the loan has come into effect from May 31 itself. “The Chinese bank has already informed the Ministry of Finance about its decision,” he added. “Now, it will be easier for us to move the long-stalled project forward.”

According to Adhikari, the project has to be completed within four years from the endorsement of loan. “We will immediately start project preparation work. Construction work will begin from September as monsoon has already begun,” he added.

As per the agreement signed between the Ministry of Finance and Civil Aviation Authority of Nepal (CAAN), the ministry will lend the amount to CAAN, levying 5 percent interest rate.

The government signed a $215.96 million soft loan agreement with China in March last year for construction of the regional international airport in Pokhara. China Exim Bank had agreed to provide 25 per cent of the loan interest-free and had set interest rate of two per cent per annum for rest of the amount, with payback period of 20 years.

China CAMC Engineering Company, a Chinese construction firm, has already started construction works of Pokhara Regional International Airport. The firm was awarded the construction contract of Pokhara airport in May 2014.

The estimated cost of the project is Rs 21.47 billion.

The Chinese loan has to be cleared within 13 years of the completion of the seven-year grace period. CAAN plans to repay the loans in 26 installments -- two installments per year.