Photo: FILE
KATHMANDU, NEPAL: Nepal Airlines Corporation’s (NAC) narrow-body aircraft engine has remained stranded in Israel since April 28, 2024, due to a prolonged dispute over repair and leasing payments. Despite the engine’s overhaul being completed months ago, it has not returned to Nepal—an issue officials attribute to negligence and commission-driven delays under the former Executive Chairperson, Yuvraj Adhikari.
The aircraft is currently flying with a leased engine, costing the corporation NPR 1.1 million per day. Israel Aerospace Industries (IAI) informed NAC in October 2024 that the repaired engine was ready for pickup, but unresolved financial disputes have kept it grounded abroad.
According to NAC sources, disagreements involve costs for two engines—one repaired earlier and another recently overhauled. NAC has already paid USD 4.9 million for the first engine repair but refused to pay an additional USD 2.1 million, which IAI claims is certified and due. NAC has also demanded compensation for the five-month grounding of the aircraft, but IAI has not responded.
IAI later completed repairs on the second engine, initially estimated at USD 6.7 million, but billed USD 8.4 million, escalating the dispute further. The Letter of Credit (LC) for this engine has also expired as reported by biznessnews.com.
Amid rising tensions, the Civil Aviation Authority of Nepal (CAAN) has urged NAC to clear pending lease dues. The Prime Minister and Minister for Culture, Tourism, and Civil Aviation, Shushila Karki, has directed NAC to bring the repaired engine home immediately.
To retrieve the engine, NAC must:
Pay the certified USD 2.1 million balance for the first engine
Renew the expired LC for the April 2024 repair
Clear pending lease-related payments
IAI has expressed willingness to sit for negotiations regarding compensation disputes after NAC collects the engine.
If delays continue, NAC risks grounding the leased-engine aircraft by December 2025, which would lead to daily revenue losses of up to NPR 12.5 million. Internal investigations may follow to determine responsibility for the financial losses incurred during the dispute.
From Facebook