Airports' Upgrade in Nepal to Increase Safety, Boost Tourism

News Release | 24 November 2009

MANILA, PHILIPPINES - The Asian Development Bank (ADB) will help Nepal appeal to even more tourists through a project to improve the country's airports and civil aviation safety standards.

The ADB Board of Directors approved a total of $80 million - including a grant of $10 million and a loan of $70 million equivalent - to finance the Nepal Air Transport Capacity Enhancement Project.

The project will improve safety and capacity at Tribhuvan International Airport (TIA) in Kathmandu, and three domestic airports - Lukla, Rara and Simikot - that serve remote areas inaccessible by road. TIA, Nepal's only international airport, will be reconfigured and upgraded to international safety standards, with the project including provision for the construction of 1.4 km of new taxiways, a new power supply system, the refurbishment of its international terminal and the construction of a new temporary domestic terminal. The three domestic airports will receive improved communication equipment, visual approach aids, and weather equipment.

"Due to the challenging terrain in Nepal, air transport is an essential part of the country's transport system, providing access to many remote towns and villages in the mountainous areas," said Mr. Dong-Kyu Lee, Transport Specialist in ADB's South Asia Department. "Providing safe and reliable aviation access to the country will attract more tourists and greatly contribute to Nepal's economy."

With international and domestic passenger traffic expected to increase significantly in the next four years, the project will also seek to enhance the organizational effectiveness of the Civil Aviation Authority of Nepal, the regulatory body that controls the country's aviation industry. Existing regulations will be updated to meet international standards and viable opportunities for private sector participation in future airport developments will be identified.

ADB's grant and loan, from its concessional Asian Development Fund, covers 87% of the project cost of $92 million. The Government of Nepal will contribute the remaining 13%. The ADB loan has a 32-year term, including a grace period of eight years. Interest is charged at 1% per annum during the grace period and 1.5% per year for the rest of the term.

The Civil Aviation Authority of Nepal is the executing agency for the project, which is due for completion around the end of 2014.