A government inquiry into a new $216 million international airport in Nepal’s second-biggest city found that “irregularities and corruption” by officials and lawmakers allowed a Chinese state-owned contractor to ignore its obligations and charge for work it never completed.

In a 36-page report released on Thursday, a parliamentary committee’s investigation into the airport in Pokhara found that China CAMC Engineering Co., the construction arm of a state-owned conglomerate Sinomach, failed to pay taxes, did not finish the project to specification, and used poor quality construction, all because of corruption and a lack of oversight.

In 2023, The New York Times reported that CAMC had inflated the project’s cost and undermined Nepal’s efforts to maintain quality control, prioritizing its own business interests. Nepal’s Civil Aviation Authority, the agency overseeing the airport’s construction, was reluctant to upset Beijing on an important project for both countries, The Times found.

Shortly afterwards, an 11-member parliamentary committee started investigating the airport’s construction.

The international airport in Pokhara, a tourist destination at the foothills of the Himalayas, has become a financial albatross for Nepal, serving as a cautionary tale about the consequences of borrowing heavily from China.

The airport was built with a 20-year loan from the Export-Import Bank of China, a state-owned lender that finances Beijing’s overseas development work. Nepal must soon start repaying the loan using the profits generated by the airport, which opened in 2023. The airport has fallen well short of its projections for international passengers. There is only one international route landing in Pokhara.

China celebrated the airport’s construction as a “flagship project” of its Belt and Road Initiative, President Xi Jinping’s signature infrastructure campaign, which has doled out an estimated $1 trillion in loans and grants to other countries.

But Nepal has quietly rejected that designation, because it has complicated diplomatic ties with India, a major destination for Nepali travellers. New Delhi has not approved any international routes to Pokhara.

In August, Nepal’s communist government, led by K.P. Sharma Oli, who has close ties to Beijing, formally requested China convert the $216 million airport loan into a grant. Nepali officials have expressed optimism about the request, but there was no formal announcement about an agreement when Oli met Xi in November.

The parliamentary committee’s report found that CAMC failed to complete the work of digging, refilling, and adding gravel to the runway, as well as other key components of the airport, despite a contract stipulating that it was required to do so. It also found that the firm received payment for aspects of the project that were never built.

New York Times News Service