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Nepal’s Pokhara International Airport exposes systemic corruption, procurement irregularities, and geopolitical constraints, highlighting challenges in governance
On 7 December 2025, Nepal’s Commission for Investigation of Abuse of Authority (CIAA) filed a chargesheet against 55 individuals and CAMC Engineering, Co., the Chinese State-Owned Enterprise (SOE), which undertook the construction of the international airport at Pokhara. The chargesheet is the biggest, but not the first bolt to the complicated history of the international airport, with discussions dating back to the 1970s. While the anti-graft body’s latest action has renewed hopes about seeking accountability from the state and private actors partaking in corrupt practices, the airport’s development trajectory raises broader concerns about the structural problems within Nepal’s polity.
The CIAA has charged 55 individuals, including the chairman and regional general manager of CAMC Engineering, for deliberately inflating the cost of the airport and authorising excessive payments. It has also held both Nepali officers and the Chinese company for colluding to justify the cost of US$244.04 million. This follows the findings made by a parliamentary sub-committee in April this year, which highlighted irregularities in the airport’s construction and estimated the embezzled amount at around NPR14 billion.
The authority intends to recover the amount from the individuals and entities charged, making it the largest corruption case in Nepal to date.
As per the chargesheet, the individuals concerned—including former finance and tourism ministers as well as ex-secretaries—considered “technically baseless bids” that were overpriced and formed fraudulent advisory groups, all aimed at generating additional profit. The Public Procurement Act had no provision for the committees whose recommendations were used to justify the revised costs. According to the CIAA, between August 2018 and February 2024, CAMC received approximately US$224.77 million, of which US$74.34 million was artificially inflated. The authority intends to recover the amount from the individuals and entities charged, making it the largest corruption case in Nepal to date.
After nearly five decades of delay, the international airport was formally inaugurated on 1 January 2023. The people of Pokhara had long seen the airport’s potential as a boost to the tourism sector. In pursuit of this goal, the residents staged strikes and protests intermittently over the years, urging authorities to complete the airport. But much to their disappointment, since its inauguration, there have been no regular international flights; however, a few charter flights from China and Bhutan have flown. Himalaya Airlines briefly introduced a flight between Pokhara and Lhasa in March this year, though the service has since been discontinued. The failure of the authorities to fully operationalise the airport is a consequence of both the endemic corruption in Nepal’s public sector as well as the geopolitical considerations which it has to factor in owing to its location. There are also design faults and concerns over fuel storage facilities and the runway drainage. Furthermore, the runway’s size also limits the functioning of narrow-body jets, forcing them to fly at limited capacity with payload issues, making it possible for only short-range flights to fly at full capacity.
Nepali officials say that, due to this restriction, flights can only enter via the southern route through Simara.
India’s decision not to grant air access for flights to enter Nepal via the western route is also seen as contributing to the airport’s redundancy. Nepali officials say that, due to this restriction, flights can only enter via the southern route through Simara. Although India permits flights to exit through western Nepal, entry is restricted to the Southern route. This decision has affected both regional airports in Bhairahwa and Pokhara.
The initial discussions around the construction of the airport began in 1971, when a German consulting firm undertook the site selection work and prepared a master plan with support from the Asian Development Bank. Subsequently, the Japan International Cooperation Agency (JICA) got involved in 1989, with the cost pegged at US$39.6 million. After years of delays, the government under Puspa Kumar Dahal approved the project in 2009. At that point, the cost was projected at US$169.69 million. The government had planned to initially borrow US$145 million in soft loans. In 2011, Barsha Man, then Finance Minister, signed a secret Memorandum of Understanding (MoU) with the CAMC, offering the government’s ‘‘solid and substantial’’ support to the company in the tender process. The subsequent 45-day deadline for submission of tenders raised questions about the government’s apparent favouritism. Although the deadline was later extended by 30 days, all three proposals from the nine bidders were pre-approved by the Chinese EXIM bank, which had stipulated that loans would be released only to its approved bidders. While the MoU was ultimately scrapped after the opposition leaked it in the Parliament, the Civil Aviation Authority of Nepal (CAAN) went ahead with the bidding process.
The CAMC bid US$305 million, almost double the government’s estimate. In 2013, it agreed to build the airport at government-recommended estimates. It hired a consultant, the China Airport Construction Company, which submitted a revised amount of US$264 million. With the inclusion of a 16 percent price increase and 13 percent value-added tax, the amount reached close to US$300 million, which matched CAMC’s original bid. In April 2014, a revised cost of US$215.96 million was reached by CAAN as per the guidelines of an expert committee. In May, the CAAN chief and the CAMC chairman signed the contract; however, the director general of the CAAN expressed concerns. A minister-level decision to change the nature of the contract to the Engineering, Procurement and Construction (EPC)model, making the contractor responsible for the project’s completion with a predetermined price regardless of any increase in costs after the contract is signed, compelled him to give his go-ahead.
With the inclusion of a 16 percent price increase and 13 percent value-added tax, the amount reached close to US$300 million, which matched CAMC’s original bid.
The agreement for a loan was subsequently signed during former Prime Minister K.P. Sharma Oli’s visit to Beijing in March 2016. CAMC began construction on 1 November 2017 with the disbursal of the first loan amount on April 1, 2018. As per the loan’s conditions, 25 percent was interest-free, and on the remaining amount, an interest of 2 percent was levied annually, with the repayment period of twenty years and a seven-year grace period.
When the airport was inaugurated on 1 January 2023, the then-Chinese ambassador described it as a flagship project under the Belt and Road Initiative (BRI) in Nepal. The Nepali side distanced itself from this classification, as the implementation plan for the BRI had yet to be signed, China saw some benefit in co-opting some of its projects, which predated the signing of the BRI framework agreement, to show its success in the country. In the current circumstances, this classification has become problematic for Beijing.
China has been a dominant player in Nepal’s infrastructure sector, with the majority of contracts being awarded to it. It was expected that Nepal would be able to repay the loan through the profits it would earn at the airport, based on projections of around 280,000 passengers flying through the airport starting in 2025. With the flights failing to take off, Nepal’s leadership has been under immense pressure to urge Beijing to convert the loan into a grant, a request that Beijing has so far not accepted. The two sides signed a framework cooperation agreement in December 2024 to address some of Nepal’s concerns around the funding modalities, but no decision has been made on Pokhara.
CAMC has not responded to the latest allegations. Following the PAC report, the company has denied allegations of wrongdoing. The outgoing Chinese Ambassador to Nepal, Chen Song, raised these charges in his farewell call with the interim Prime Minister, Sushila Karki, on 17 December. He urged Nepal not to implicate China and its entities, stating that under Chinese law, the contractor, by virtue of being an SOE, cannot be involved in corruption.
With the flights failing to take off, Nepal’s leadership has been under immense pressure to urge Beijing to convert the loan into a grant, a request that Beijing has so far not accepted.
Despite these claims, China has been trying to navigate the concerns raised about the corruption in BRI projects globally. The lack of transparency vis-à-vis financing and other details leads to speculations. China has initiated internal disciplinary measures within BRI projects since 2024, as further allegations risk reinforcing the narrative of Chinese assistance as an indirect debt trap. Projects under the BRI are seen as being more susceptible to corruption than those that are not (35 to 21 percent difference), according to a 2021 study by AidData. A report by Nepal’s Centre for Social Inclusion and Federalism highlights the endemic corruption in Chinese-funded projects, which leads to a negative perception.
Nepal is currently being governed by an interim PM who was installed after the country’s Generation Z staged protests against the erstwhile KP Sharma Oli-led government on 8-9 September, leading to his resignation. A major driver behind the protests was systematic corruption in the country. The demands made by the GenZ groups were also institutionalised further when they signed an agreement with the interim government recently, with a focus on managing corruption. The CIAA’s investigation comes in the backdrop of these changes. While the interim government has a limited mandate as the country prepares for the 5 March elections, it has sought to address long-standing corruption cases.
Nepal ranks 107 out of 180 countries in Transparency International’s Corruption Perceptions Index, and the CIAA is currently investigating multiple cases in the country. The lax procurement systems and auditing mechanisms have enabled such actions, with all actors seeking to aggrandise their profits. The pervasive nature of this corruption is also reflected in the names mentioned in the chargesheet, which include leaders from all three main political parties, pointing to collusion across party lines. Whether this chargesheet leads to a swift trial under the next government remains to be seen.
Shivam Shekhawat is a Junior Fellow with the Strategic Studies Programme at the Observer Research Foundation.
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Shivam Shekhawat is a Junior Fellow with ORF’s Strategic Studies Programme. Her research focuses primarily on India’s neighbourhood- particularly tracking the security, political and economic ...
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