by Our Correspondent in Kathmandu
Nepal’s anti-corruption agency has filed sweeping charges against 55 individuals and a Chinese construction company in what has become the country’s largest-ever corruption case, targeting alleged financial irregularities in the construction of the Chinese-funded Pokhara International Airport.
The Commission for Investigation of Abuse of Authority (CIAA) submitted its charge sheet to the Special Court on Sunday, accusing the defendants — including five former ministers and ten former government secretaries — of colluding with China CAMC Engineering to artificially raise the airport’s cost. The $216 million project, financed through a 20-year loan from China’s Export-Import Bank, has been under scrutiny for years amid concerns over its financial viability.
According to the CIAA, China CAMC Engineering and Nepali officials “revised the approved cost estimate of the airport with malicious intent,” inflating the budget and facilitating excessive payments. The agency estimates losses of roughly $74.34 million and is seeking to recover 8.36 billion Nepali rupees (about $63 million) — its largest financial recovery claim to date. The investigation began last year.
The case arrives at a delicate moment for Nepal. Pokhara International Airport, marketed as a flagship national project, opened in January 2023 but has since struggled to attract international flights. With revenues far below expectations, the government is facing growing public anxiety over its ability to repay the Chinese loan.
China has maintained that the airport falls under its Belt and Road Initiative (BRI), while Nepal has insisted it is not formally part of the program. The legal action marks the first time Nepal has challenged a major Chinese-funded infrastructure project on corruption grounds, potentially signaling a shift in Kathmandu’s posture as it reassesses long-standing political and financial ties with Beijing.
The charges also follow a wave of youth-led protests in September that toppled former Prime Minister KP Sharma Oli’s government. Initially triggered by a temporary social media ban, the demonstrations quickly escalated into an anti-corruption movement demanding accountability and an end to political impunity.
Nepal’s interim government, headed by former chief justice Sushila Karki, has pledged zero tolerance for corruption as the country prepares for elections on March 5 next year. Under the previous administration, Nepal-China relations deepened significantly, with Oli signing multiple agreements aligned with the BRI — though his government failed to convince Beijing to convert the airport loan into a grant.
The Pokhara case also fits into a broader pattern: several Chinese overseas infrastructure projects have faced accusations of overpricing, financial opacity, or debt risks, including Indonesia’s high-speed rail project, which recently entered debt-restructuring talks.
Transparency advocates say the Nepal case could be a turning point. “This is unprecedented. The antigraft body filed this case only because it could function independently under the new government,” said Madan Krishna Sharma, president of Transparency International Nepal. He warned, however, that political pressure or legal loopholes could still interfere with the outcome.
Sharma added that the airport scandal reflects deeper systemic issues: “Corruption has been so entrenched in Nepal, it has spread across almost all state institutions. This case shows an organized form of corruption, where from the project’s conceptual stage to contractor selection and implementation, the entire process lacked transparency.”
Historical Context and India’s Failed Bid
The idea of a modern international airport in Pokhara dates back to the 1970s, but political instability, bureaucratic delays, and the Maoist insurgency (1996–2006) prevented progress. A formal project plan emerged in the early 2000s, with serious discussions beginning around 2011. At that time, both China and India expressed interest in funding and developing the airport.
India, via state-linked companies and private contractors such as the Adani Group, sought to manage and invest in Pokhara Airport and other regional aviation projects. Reports indicate that negotiations with the Nepali government included the potential to operate multiple airports, provide technical expertise, and even participate in the construction of a major airport at Nijgadh. However, political complications, ongoing Chinese financing, and bureaucratic hesitation prevented India from securing any contracts. The Adani proposal ultimately faltered, leaving China as the primary financier and builder of the airport.
Beijing’s involvement provided immediate funding through a 20-year loan from China Exim Bank and brought in China CAMC Engineering for construction, giving China a strategic foothold in western Nepal while ensuring that Indian interests remained sidelined.
Even before opening, Pokhara International Airport faced skepticism over its financial and operational viability. The Civil Aviation Authority of Nepal (CAAN) initially estimated the airport’s cost at around $145 million, but the final construction contract reportedly rose to $216 million, highlighting a $70–75 million increase. Combined with low tourist flight traffic and minimal operational revenues since its January 2023 inauguration, these figures have fueled public concerns over Nepal’s ability to service the Chinese loan.
Parliamentary audits found additional irregularities, including questionable tax exemptions worth NPR 2.22 billion and payments for earthworks that were never completed. The findings led to calls for suspension of senior CAAN officials and for the CIAA to launch a formal investigation.
Nepal’s legal challenge carries geopolitical significance. The airport scandal underscores how infrastructure projects funded by foreign powers, particularly through loans rather than grants, can create both opportunities and risks for smaller states. For China, Pokhara Airport represented a showcase of its Belt and Road reach. For India, Nepal’s decision to proceed with China alone marked a setback in its long-standing influence over Himalayan trade and connectivity projects.
The trial now serves as a litmus test for Nepal’s ability to reconcile public demand for accountability with the diplomatic necessity of maintaining stable ties with Beijing. Analysts note that outcomes could influence future bilateral projects, governance norms, and public perceptions of foreign-funded infrastructure.
