The Japanese International Corporation Agency (JICA)-funded expansion of Bandaranaike International Airport (BIA) has been temporarily halted due to the government’s inability to repay the loan.
The project has recently sparked controversy due to allegations that a minister was involved in a bribe, which Japanese authorities have categorically denied.
According to Aviation Ministry sources, JICA has decided to halt funding of US$570 million for the Terminal-2 construction of the BIA Development Project (BIADP) Stage 2, compelling the contractor, Japanese Taisei Corporation Sri Lanka Ltd, to halt work until the debt restructuring process in Sri Lanka is completed.
Sri Lanka suspended all foreign loan repayments in April and began negotiations with international creditors on a debt restructuring plan.
Furthermore, due to the country’s current economic situation, the Taisei Corporation has faced difficulties in obtaining necessary materials for construction work, as well as high costs, according to a senior official.
Because of the current situation in Sri Lanka and the lack of fuel and other materials, the project has been temporarily halted; as a result, management has decided to terminate the employment agreement of workers on the project, Taisei Corporation confirmed.
The Aviation Ministry will persuade JICA to continue funding the project because of its importance to Sri Lanka, as directed by Minister Nimal Siripala de Silva, who was reinstated in his post after a Presidential committee cleared him of any bribery allegations.
Taisei Corporation Sri Lanka General Manager Maskato Sato denied the bribery allegations, saying he was shocked to hear such unfounded allegations.
The new passenger terminal building is expected to be completed in 2024, according to the JICA. The terminal building would be built on the concept of an Eco-Airport, using advanced Japanese technology and know-how. BIA is expected to handle 15 million passengers per year once the terminal is completed. The BIA Expansion project recently unveiled a new apron and taxiways.
Under the Special Terms for Economic Partnership, JICA has provided total financing for the expansion.
According to JICA sources, the loan facility was granted on concessionary terms, with 0.1 percent p.a. interest and a 40-year repayment period, to promote technology transfer, quality infrastructure development, and economic cooperation between Sri Lanka and Japan.