July 9: The issue of restructuring the state-owned Nepal Airlines Corporation (NAC) has courted controversy yet again. Employees of the corporation have started protest against the proposal to privatize the flag carrier of Nepal.

In a press release issued on July 7, General Manager Dim Prasad Poudel said that the NAC should be fully owned by the Government of Nepal.

The Ministry of Culture, Tourism, and Civil Aviation has claimed that the NAC will be converted into a company with 100 percent investment of the government. The ministry also assured that NAC will not be privatized.

Sources close to the ministry claim that there is no alternative than to restructure the NAC into a company to save the cash-strapped corporation. Nepal Airlines Corporation was formed as per the Airlines Act.

Investment from external sources can be accepted by restructuring the existing corporation into a company if any good international company is willing to cooperate.

“The current structure of NAC does not allow foreign investment. Therefore, preparations are underway to restructure it,” said GM Poudel, adding, “Right now, we can bring expert team from abroad but we are not allowed to accept foreign investment. So, there is no point in protesting at the moment.”

GM Poudel claimed that they were only making an attempt to reform the institution by discouraging the trend of recruiting staff on contract basis.

The ministry has not renewed the contracts of 300 employees during the lockdown. An official said that the financial condition of the corporation is very fragile and it is being restructured to revive the NAC. Right now, the NAC has a loan of Rs 47 billion. The official said that an agreement has been reached to convert NAC into a public company for long-term benefit.

Stating that Nepal's private sector does not have the capacity to raise such a huge amount to operate NAC, the officials claimed that NAC’s privatization will not happen under any circumstances.

The official said that the corporation needs to compete with international airlines. It has to find a long-term solution as it needs to add more aircraft.

The government is planning to sell 51 percent stakes of the company to founder shareholders and 49 percent to private companies, former and current employees, and foreign airlines companies, if no single individual or company comes in to take full ownership.   However, the employees of NAC claim that the government is trying to privatize the company. The agitating workers said that the draft of the proposal was rejected and they would continue protest until the current General Manager Dim Prasad Poudel resigns.

While purchasing the Airbus aircraft, the corporation took loans from the Employees Provident Fund and Citizens Investment Fund. NAC procured two widebody Airbus aircraft with loans from these two organizations on a government guarantee.