• JICA suspended project in 2022
• Japan plans post-debt restructuring renegotiations

The Bandaranaike International Airport (BIA) is in urgent need of $ 400 million for crucial gap financing to complete the construction of its Terminal II, The Sunday Morning learns.

Terminal II comprises a substructure and a superstructure. 

It is learnt that the substructure of the project is currently being constructed by Access Engineering and is due to be completed by November. 

Speaking to The Sunday Morning, Airport and Aviation Services (Sri Lanka) (AASL) Chairman Athula Galketiya said that Access had begun construction on the remainder of the substructure (Main Terminal Building, Passenger Bridge No.2, and Passenger Bridge No.3) on Thursday (25), with plans to complete it by November.

“This was initially being funded by the Japan International Cooperation Agency (JICA). However, after they suspended the project in 2022 until debt restructuring was finalised, we were left with a partly-constructed substructure. The substructure comprises the foundation up to the ground level of the airport.

“Since this is only partly completed, there is a safety problem. It is not technically sound for the building and we are facing operational issues. Therefore, we decided, with the Japanese consultant, to float a tender for the completion of the substructure,” said Galketiya. 

According to Galketiya, the local bidding process had resulted in the tender being awarded to Access for Rs. 3.5 billion, funded by the AASL. 

He further said that although Japan had reassured that JICA would recommence financing the project once debt restructuring was completed, an issue of gap financing had arisen. 

“As construction costs have gone up and payments to the previous contractor have increased due to stoppage, we need gap financing. We have not ascertained the exact amount yet but it will be around $ 400 million. If JICA gives its word on that too, it will handle it, but if it doesn’t provide gap financing, we will have to phase out the project. 

“Regardless, these negotiations will have to happen after the debt restructuring process is completed. In the meantime, we are ready with new estimates and a plan for the phasing out, if necessary,” he said. 

Prior to the suspension, construction was being handled by a Japanese contractor and it is learnt that the Cabinet has recently approved the contractor’s final claim for the work that had been done so far. This amount is due to be paid with JICA funds. 

Meanwhile, during Prime Minister Dinesh Gunawardena’s visit to China last month, it was reported that Beijing had expressed interest in developing the BIA. 

It was also reported last year that the China Harbour Engineering Company (CHEC) had sent a proposal to the Ministry of Ports, Shipping, and Aviation regarding the construction of the new passenger terminal at the BIA. 

However, Galketiya said that the AASL was unaware of such a proposal.

“JICA is assuring us that it will provide the balance amount of the loan once the debt restructuring is completed and hence, a new Japanese contractor will be selected afterwards. Both the Japanese Finance Minister and the JICA President have visited the project site. We believe that the Japanese Foreign Minister, who is scheduled to visit the country next week, will also visit it.” 

The construction of the second terminal at the BIA began in 2020 with JICA funding but has been stalled since 2022 as a result of Sri Lanka’s default due to the economic crash.