Nepal: Civil Aviation Sector Improvement Program

Sovereign (Public) Project | 38349-029

The proposed policy-based loan (PBL) to Nepal for the Civil Aviation Sector Improvement Program will provide budget support for civil aviation sector reforms in restructuring of the current Civil Aviation Authority of Nepal (CAAN) and strengthening of its oversight functions, management accountability, and operational efficiency. The program is consistent with Asian Development Bank (ADB) country partnership strategy for Nepal, 2020 2024. The program is aligned with ADB's Strategy 2030 operational priorities of strengthening governance and institutional capacity (operational priority 6) and fostering regional cooperation and integration (operational priority 7). The program will support gender quality and social inclusion initiatives of the implementing agency as well.

Project Name Civil Aviation Sector Improvement Program
Project Number 38349-029
Country Nepal
Project Status Active
Project Type / Modality of Assistance Loan
Technical Assistance
Source of Funding / Amount
Loan 3948-NEP: Civil Aviation Sector Improvement Program
concessional ordinary capital resources lending / Asian Development Fund US$ 50.00 million
TA 6531-NEP: Supporting the Civil Aviation Sector Improvement Program
Technical Assistance Special Fund US$ 500,000.00
Strategic Agendas Inclusive economic growth
Regional integration
Drivers of Change Gender Equity and Mainstreaming
Governance and capacity development
Private sector development
Sector / Subsector

Transport / Transport policies and institutional development

Gender Equity and Mainstreaming Some gender elements
Description The proposed policy-based loan (PBL) to Nepal for the Civil Aviation Sector Improvement Program will provide budget support for civil aviation sector reforms in restructuring of the current Civil Aviation Authority of Nepal (CAAN) and strengthening of its oversight functions, management accountability, and operational efficiency. The program is consistent with Asian Development Bank (ADB) country partnership strategy for Nepal, 2020 2024. The program is aligned with ADB's Strategy 2030 operational priorities of strengthening governance and institutional capacity (operational priority 6) and fostering regional cooperation and integration (operational priority 7). The program will support gender quality and social inclusion initiatives of the implementing agency as well.
Project Rationale and Linkage to Country/Regional Strategy Nepal has maintained a traditional civil aviation sector structure whereby functions of regulation, safety oversight, and service provision are absorbed by one entity, Civil Aviation Authority of Nepal (CAAN). The roles of regulator and service provider lodged in a single organization create a source of conflict of interest. The regulatory function may not provide adequate oversight on service provision and may raise operating costs and result in suboptimal performance as a service provider. There are also repercussions on aviation safety, which have been noted and highlighted by international aviation agencies. The International Civil Aviation Organization states in its Global Aviation Safety Plan (Appendix A of Organizational Challenges Roadmap) that an independent regulatory authority should be established and maintained, which includes separation of oversight functions from service provision functions where these exist within the authority. The European Commission has banned Nepali airlines from flying to the European Union because of a lack of safety oversight by the aviation authority of Nepal. To remedy this situation, the Nepal Aviation Safety Plan has placed the separation of the CAAN as a priority measure to comply with the international standards. The change of the governance structure in the civil aviation sector is the most fundamental and imminent reform requirement. The government is in the process of enacting new civil aviation legislation, which were originally drafted with the assistance of the consulting services under the ADB-funded Air Transport Capacity Enhancement Project. The main objective of the new bills is to reform the civil aviation sector in Nepal by bifurcating the roles of the regulator and the operator (CAAN) into separate entities.
Impact

Safe, reliable, standard, easily available, accessible for the general public, sustainable, and effective air services developed

Aviation safety performance in Nepal enhanced

Project Outcome
Description of Outcome Nepal's aviation safety oversight capabilities and operational efficiencies strengthened
Progress Toward Outcome
Implementation Progress
Description of Project Outputs

Legal framework of the civil aviation reforms approved

Independent regulatory body for the civil aviation established and functionalized

Independent service provider for the civil aviation established and functionalized

Status of Implementation Progress (Outputs, Activities, and Issues)
Geographical Location Nation-wide
Safeguard Categories
Environment C
Involuntary Resettlement C
Indigenous Peoples C
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design
During Project Implementation
Business Opportunities
Consulting Services ADB will engage the consultants following the ADB Procurement Policy (2017, as amended from time to time) and its associated project administration instructions and/or staff instructions.
Procurement Not Applicable.
Responsible ADB Officer Nakai, Kanzo
Responsible ADB Department South Asia Department
Responsible ADB Division Transport and Communications Division, SARD
Executing Agencies
Ministry of Finance
Agriculture Program
[email protected]
The Government of Nepal
Singha Durbar
Kathmandu, Nepal
Timetable
Concept Clearance 27 Nov 2019
Fact Finding 17 Mar 2020 to 23 Mar 2020
MRM 22 Apr 2020
Approval 30 Jun 2020
Last Review Mission -
Last PDS Update 30 Jun 2020

Loan 3948-NEP

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
30 Jun 2020 09 Jul 2020 13 Jul 2020 30 Jun 2023 - -
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 50.00 Cumulative Contract Awards
ADB 50.00 07 Sep 2021 25.00 0.00 50%
Counterpart 0.00 Cumulative Disbursements
Cofinancing 0.00 07 Sep 2021 25.00 0.00 50%

TA 6531-NEP

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
30 Jun 2020 24 Jul 2020 24 Jul 2020 30 Sep 2022 - -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
500,000.00 0.00 0.00 0.00 0.00 0.00 500,000.00 07 Sep 2021 0.00

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Evaluation Documents See also: Independent Evaluation

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Related Publications

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Tenders

No tenders for this project were found.


Contracts Awarded

No contracts awarded for this project were found


Procurement Plan

None currently available.