Nepal : Civil Aviation Sector Improvement Program

Sovereign 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 / Economy
  • Nepal
Project Status
Closed
Project Type / Modality of Assistance
  • Loan
Source of Funding / Amount
Loan 3948-NEP: Civil Aviation Sector Improvement Program
Source Amount
Concessional ordinary capital resources lending US$ 50.00 million
TA 6531-NEP: Civil Aviation Sector Improvement Program
Source Amount
Technical Assistance Special Fund US$ 500,000.00
Operational Priorities
  • OP2: Accelerating progress in gender equality
  • OP6: Strengthening governance and institutional capacity
  • OP7: Fostering regional cooperation and integration
Sector / Subsector
  • Transport / Transport policies and institutional development

Gender
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.

Contact

Responsible ADB Officer
Yeo, Kai Wei
Responsible ADB Department
Sectors Group
Responsible ADB Division
Transport Sector Office (SG-TRA)
Executing Agencies
Ministry of Finance

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
01 Dec 2023

Funding

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 31 Dec 2023 12 Jan 2024
Financing Plan
  Total (Amount in US$ million)
Project Cost 50.00
ADB 50.00
Counterpart 0.00
Cofinancing 0.00
Loan Utilization
  Date ADB Others Net Percentage
Cumulative Contract Awards 16 Feb 2024 25.00 0.00 100%
Cumulative Disbursements 16 Feb 2024 25.00 0.00 100%

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 31 Dec 2023 -
Financing Plan/TA Utilization
ADB Cofinancing Counterpart Total
Gov Beneficiaries Project Sponsor Others
500,000.00 0.00 0.00 0.00 0.00 0.00 500,000.00
Cumulative Disbursements
Date Amount
16 Feb 2024 0.00

Project Data Sheets (PDS) contain summary information on the project or program. Because the PDS is a work in progress, some information may not be included in its initial version but will be added as it becomes available. Information about proposed projects is tentative and indicative.

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Safeguard Documents See also: Safeguards
Safeguard documents provided at the time of project/facility approval may also be found in the list of linked documents provided with the Report and Recommendation of the President.

None currently available.


Evaluation Documents See also: Independent Evaluation

None currently available.


Related Publications

None currently available.


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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.