Nepal will sign a commercial agreement with the Chinese construction company by August for construction of Pokhara Regional International Airport (PRIA), officials said on Friday.

Civil Aviation Authority of Nepal (CAAN), the implementing agency of PRIA will possibly sign and seal the commercial agreement with China CAMC Engineering Co, the lowest bidder of the project after the approval of final feasibility study report, Ranjan Krishna Aryal, joint secretary of Ministry of Culture, Tourism and Civil Aviation (MoTCA) told Xinhua.

This process will take two months. A government team from Nepal headed by joint secretary Aryal recently visited China to hold talks with officials of the construction company China CAMC as well as the Export-Import (EXIM) Bank of China about the proposed concessional loan of 145 million U.S. dollars for the project.

The team during its week long visit from May 19 to 26 also conducted field observation of different airports there including Beijing International Airport and Chengdu Shuangliu International Airport.

"Though proposed PRIA shall be smaller in size compared to Chengdu Airport that handles more than 30 million tourists a year, the visit has helped us to visualize the model of airport in Pokhara," joint secretary Aryal said.

PRIA is estimated to have the capacity of handling one million tourists per year. Nepali team has suggested that China CAMC should bring down the estimated cost of the project as much as possible to keep the cost at par with government estimate, according to Suman Kumar Shrestha, deputy director general of CAAN.

"We have advised the company to leave out some structures like aero-bridge and some other optional equipment to limit the project cost within our estimate of 167 million US dollars," he said.

China CAMC had quoted 305.13 million U.S. dollars for the project, lowest among three shortlisted Chinese firms; later the company was ready to develop the project at the government estimated cost. China CAMC will send the draft report to CAAN within next week which will be further reviewed by a technical committee under CAAN.

After incorporation of the comments of technical committee the feasibility study will be finalized within two months paving way for commercial agreement between CAAN and China CAMC in August 2013. MoTCA will then forward the approved feasibility study report to the Ministry of Finance (MoF), which will then start negotiations for the concessional loan from EXIM Bank of China.

The cabinet meeting on Feb. 14, 2013 had decided to approve the proposal of the MoTCA, which had requested approval of China CAMC' s proposal to develop the project at the government estimated cost. Government of Nepal (GoN) has initiated the process to acquire additional 26 acres of land for the construction of PRIA. GoN had acquired 150 acres of land at Chhinedanda of Pokhara in 1975 for the purpose. PRIA is believed to boost Nepali tourism industry, directly connecting popular tourist hub of Pokhara with the outside world.

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