Kathmandu, October 4 (South Asia Network) – The Nepalese government had planned to remove the country from the EU's aviation safety "blacklist" by mid-January 2027, but at this critical juncture, two key civil aviation reform bills were only submitted to the lower house a few hours before parliament's recess on October 2, and this timetable is about to fall through.

The crux of the matter is the government's plan to split the Civil Aviation Authority in two—regulation and operation. Finance Minister Svarnim Waghler, in his budget submission on May 30th, set mid-January 2027 as the deadline for this split. While previous governments have included this reform in their budgets, they have never truly implemented it; the Barendra Shah government is the first to give a clear deadline. Nepal has been on the EU's aviation safety blacklist since December 2013, severely impacting its tourism industry.

According to officials from the Ministry of Culture, Tourism and Civil Aviation, the "Civil Aviation Authority of Nepal Act" and the "Air Services Authority of Nepal Act" passed the Ministry of Finance's review and were sent to the Ministry of Law about two months ago. However, with Parliament in recess, the bills can only be discussed again during the winter session, which is far from meeting the timetable set in the budget.

Every day of delay increases the risk. Nepal plans to invite the International Civil Aviation Organization (ICAO) to conduct a Universal Safety Oversight Audit (USOAP) in May next year. According to regulations, legal documents must be revised and "frozen" six months before the audit, a period known in the industry as the "freeze period." Once frozen, the documents cannot be modified until the on-site inspection is completed; otherwise, the audit may stall before the new regulations are implemented. A senior official from the Civil Aviation Administration of China (CAAC), who wished to remain anonymous, said they intend to apply for an extension of the audit period—the reason being that progress has already been made in many areas. The new law separates regulatory and service functions, which is precisely what the ICAO is focusing on, and this could inject new momentum into the audit, paving the way for removing Nepal from the "blacklist." The European Commission also considers the ICAO audit an important basis for assessing Nepal's aviation regulation.

This debate over "separation" has been ongoing in Nepal for nearly two decades. In 2022, the United Nations aviation regulatory body explicitly required Nepal to separate its regulatory and service functions; the International Civil Aviation Organization (ICAO) stated in its draft audit report that this move was to "ensure a clear separation of powers between service providers, operators, and regulatory bodies." Despite being prioritized in successive regular plans, policies, and annual budgets, the reform has never been implemented.

When Law, Justice and Parliamentary Affairs Minister Sobita Gautam took office on March 27, she pledged to expedite legislation and prioritized 45 bills, including two civil aviation bills, for drafting. As a member of parliament, she was a leading figure in advocating for the separation of the Civil Aviation Authority's "dual role." However, according to civil aviation officials, the draft bills have been stuck in the Ministry of Law for two months, significantly slowing down the registration process.

The EU is also closely monitoring the progress. In May, Veronica Lorenzo, the EU ambassador to Nepal, stated at a press conference that the new government ministers raised the aviation safety checklist at almost every meeting, admitting she had "never been asked so frequently," suggesting progress. However, she also clarified that the EU had never demanded Nepal legislate to dismantle its institutions; its aim was functional independence and the avoidance of conflicts of interest. A 2023 assessment determined Nepal's progress was insufficient, and the civil aviation authorities subsequently developed a corrective action plan, but two and a half years later, progress has been virtually stagnant—Lorenzo said this is the real problem that needs to be addressed.

According to the proposed bill, the newly established Nepal Aviation Services Authority (CASA) will be a public institution responsible for airport operation, management, and development; providing aviation navigation and air traffic management services; and overseeing airport construction and upgrades, long-term planning, and the introduction of new technologies. The chairman will be a government-appointed expert, with the joint secretaries of the Ministry of Culture, Tourism, Finance, and Home Affairs as ex-officio members, and two additional nominated experts (at least one woman). The general manager will serve as the member secretary. With government approval, the agency can outsource services; private and non-governmental entities must undergo a competitive process. In case of emergency repairs, authorized officials may also enter private premises to handle the situation, with a subsequent report required. The general manager will serve as the chief executive officer, selected through open competition, requiring a postgraduate degree and over 15 years of civil aviation experience, for a four-year term. Employees will be included in the contributory pension system. Former Civil Aviation Administration personnel will, in principle, transfer to the new agency; those wishing to work for regulatory agencies must apply within 60 days, with no reduction in compensation. For large projects such as airports, joint investment with domestic and international investors can be explored, including public-private partnerships.

The newly split Civil Aviation Authority of Nepal will have dedicated oversight: the Minister of Culture, Tourism and Civil Aviation will personally chair the meeting, with the joint secretaries of the Ministry of Culture, Tourism and Finance serving as members, and the Director General serving as the member secretary; the government will also nominate an expert with over ten years of experience in the aviation field to join the team. The Director General will serve a four-year term, renewable.

The current reality is that the bill is stuck outside parliament, the winter session is still far off, and the mid-January deadline is fast approaching. Whether Nepal can shed this "black hat" as scheduled depends on how parliament responds this winter.