A new bill recently presented to the federal parliament, Nepal’s legislative body, proposes opening the door for private and foreign investment in the construction and operation of airports across the country. The Nepal Air Service Authority Establishment and Management Bill, 2083, aims to end the nation’s reliance on limited state budgets for aviation infrastructure.
The proposed legislation, alongside the Nepal Civil Aviation Authority Act Amendment and Integration Bill, 2083, seeks to restructure Nepal’s civil aviation sector by splitting the dual roles of the Civil Aviation Authority of Nepal (CAAN), which currently manages airports and regulates aviation services. Under the new framework, CAAN would function solely as a regulatory body, while the newly established Nepal Air Service Authority would handle airport operations and air navigation services.
Section 45 of the Nepal Air Service Authority Establishment and Management Bill, 2083, outlines legal provisions for joint investment. It states that the proposed Authority, with prior approval from the Nepal government, can collaborate with domestic or foreign investors on commercial plans and programs. It also grants the Authority broad economic and commercial powers to build, upgrade, operate, or manage new airports through public-private partnerships or joint ventures with domestic or foreign governments or institutions.
The bill also allows for the management of existing operational airports to be handed over to the private sector. Section 14, Sub-section (2) empowers the Authority to delegate the operation and management of its airports or any services provided by them to government bodies, non-governmental organizations, or private entities, subject to government approval.
To ensure transparency in such transfers, Sub-section (3) mandates that direct contractual agreements can be made with government bodies, but competitive methods, such as tenders or bidding, must be employed when engaging non-governmental organizations or private entities.
Addressing International Recommendations and Past Challenges
The introduction of these bills addresses long-standing recommendations from international bodies. The International Civil Aviation Organization (ICAO), in its Universal Safety Oversight Audit conducted in May 2009, highlighted concerns regarding the dual regulatory and service provider roles of the Civil Aviation Authority of Nepal (CAAN) at the time. ICAO recommended separate institutions for these functions, directly linked to air passenger safety.
Efforts to divide CAAN have been ongoing for over a decade; a similar bill stalled since 2012. The government’s Aviation Policy 2077 (BS) had already provisioned for the private sector to construct and operate domestic airports and helipads. The Ministry of Culture, Tourism and Civil Aviation, led by Badri Prasad Pandey when the bill was presented, had also sought public feedback on the draft bill.
Nepal currently operates three international airports: Tribhuvan International Airport in Kathmandu; Gautam Buddha International Airport in Rupandehi; and Pokhara International Airport in Kaski. The country also has 52 domestic airports; however, only 31 offer regular or chartered flights. The remaining 21 are non-operational due to expanded road networks and a lack of passengers.
Next Steps and Unanswered Questions
The proposed legislation stipulates that the bills, once passed by the federal parliament and authenticated by President Ramchandra Paudel, will come into effect 91 days after presidential certification. Their enactment would bring about a significant institutional transformation in Nepal’s civil aviation sector.
However, the exact stage of the bills in the federal parliament and their anticipated passage date remain unknown. Furthermore, information regarding specific investors who have expressed interest in the proposed private and foreign investment opportunities, or the nature of private sector involvement in reactivating the 21 currently closed domestic airports, is not yet public.
