KATHMANDU, May 17: The financial position of state-owned Nepal Airlines Corporation (NAC), long plagued by irregularities, has deteriorated sharply as its debt burden continues to soar.
The 63rd report of the Office of the Attorney General (OAG) highlights that NAC’s outstanding loans reached Rs 55.78 billion by the end of the last fiscal year—a staggering increase of Rs 19 billion over the past decade. In 2013, the corporation borrowed Rs 36 billion, including Rs 22 billion from the Employees Provident Fund (EPF) and Rs 12 billion from the Citizen Investment Trust (CIT), to purchase Airbus A320 and A330 aircraft.
Currently, NAC owes Rs 31.33 billion to the EPF and more than Rs 21.12 billion to the CIT. The OAG has instructed the national flag carrier to prepare an annual repayment calendar to clear these dues.
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The report further reveals that NAC’s financial indicators have fallen well below acceptable thresholds. A comprehensive evaluation of Nepal’s aviation sector in November 2025—conducted by a five-member committee led by former Supreme Court Justice and then Industry, Commerce, and Supplies Minister Anil Kumar Sinha—also painted a bleak picture of the corporation.
According to the government’s findings, NAC is edging toward insolvency, unable to meet its liabilities. Its debt-to-equity ratio stands at a shocking negative 12.33, meaning the corporation’s paid-up capital has turned fully negative, with liabilities far outweighing assets.
Frequent changes in government leadership, resulting in pressure to replace NAC’s executive management, coupled with weak governance and poor financial planning, have hindered any chance of recovery.
Analysts note that long-standing corruption has severely undermined NAC’s financial performance. Beyond recent procurement controversies, the corporation also suffered heavy losses from the purchase of Chinese-made aircraft—four Y12e and two MA60s—between 2014 and 2018. The deal, financed through a mix of grants and loans totaling Rs 6.66 billion, proved highly detrimental to NAC’s already fragile finances.
