BIA Project B contractor to pay penalty to SL Govt.

14 Mar 2021

BIA Project B contractor to pay penalty to SL Govt.

14 Mar 2021

The Japanese contractor, which has been significantly delaying the completion of Project Package B at the Bandaranaike International Airport (BIA), is expected to pay penalties to the Sri Lankan Government for the delay, The Sunday Morning Business learns. The penalty comes amidst the fund provider of the project, Japan International Co-operation Agency (JICA), remaining somewhat firm in not delaying the recovery of the loan it provided the Sri Lankan Government to undertake the said project. Airport and Aviation Services Sri Lanka Ltd. (AASL) Chairman General G.A. Chandrasiri told The Sunday Morning Business that Sri Lanka does not have to pay any penalties to JICA due to the delay in completing the project. “Why should we pay compensation to them? The contractor is paying compensation to us. As per the contract agreement, they have already passed the deadline. So we are getting penalties from them for not doing it in time,” Chandrasiri added. We learnt that it is highly unlikely that JICA would waive the commitment fee that Sri Lanka is currently paying and would continue to pay until the completion of Package B, even though the delay in completion is not from the side of the Sri Lankan authorities. Yet, Sri Lanka might use the penalty the Japanese contractor would pay to them, to settle these late charges. “This is a set of loans. If we are to delay recovery, everything has to be scheduled back. If JICA is to reschedule, it should go to the Paris Declaration as well. This matter has already been explained to the Sri Lankan authorities. It is unlikely this will be rescheduled,” our sources at the JICA local office told us two weeks ago. Expansion Project B of the BIA, which includes new aircraft parking bays, a retention pond and stormwater drainage system, and an access road, was initially scheduled to be completed in October last year. Nevertheless, due to a number of reasons, the project is a couple more months away from being completed. Speaking to us, Ministry of Tourism Secretary S. Hettiarachchi two weeks ago stated that BIA Project Package B is already four months behind schedule, yet they gave the Ministry until August this year to complete the project. “What happened here was there was an independent Sri Lankan consultant for this project. The contractor had not obeyed or followed instructions provided by this consultant. As a result, they had to demolish certain constructions they already completed. In addition to this, some sort of polyethylene sheets they bought for construction had also expired and they informed us that they need some time to import them again,” Hettiarachchi added. He added that even though the demolishing and rebuilding do not have a financial impact on Sri Lanka, as the cost of the project is fixed, the delay in completing Project Package B is weighing down the progress of the other expansion project packages at BIA, which are going in parallel to Package B. “We feel like this particular Japanese company is not taking this project seriously, as for them this project is like a ‘peanut’, given the history of their big infrastructure projects globally,” Hettiarachchi further noted. According to a media spokesperson of the Ministry of Tourism, the cost of Package B is $ 6 billion and it was started in 2017. The loan agreement is JICA’s 45th loan package to Sri Lanka. JICA is the executing agency for official development assistance (ODA) of the Government of Japan and is one of the largest contributors towards development assistance in Sri Lanka. The project would be developed based on the concept of eco-airports with the utilisation of Japanese advanced technology and knowhow. In order to promote technology transfer and economic co-operation between Sri Lanka and Japan, JICA’s loan is provided under the Special Terms for Economic Partnership (STEP), with 0.1% p.a. interest and a 40-year repayment period. In March last year, the JICA office in Sri Lanka confirmed to us that the Sri Lankan Government has been paying commitment charges every six months for eight years for a loan agreement signed in 2012 with JICA. It has also been paying a front-end fee every six months for another loan agreement with JICA signed in 2016. Both of these loans were obtained for the development of BIA, Sri Lanka’s main airport. A commitment fee is a fee that is charged by a lender from a borrower to compensate the lender for keeping a credit line open. The fee also secures a lender’s promise to provide the credit line on the agreed terms at specific dates, regardless of the conditions of the financial markets. A front-end fee is paid to a banker for setting up a transaction. It is usually calculated as a percentage of the value of the loan.

Kapruka

Discover Kapruka, the leading online shopping platform in Sri Lanka, where you can conveniently send Gifts and Flowers to your loved ones for any event. Explore a wide range of popular Shopping Categories on Kapruka, including Toys, Groceries, Electronics, Birthday Cakes, Fruits, Chocolates, Automobile, Mother and Baby Products, Clothing, and Fashion. Additionally, Kapruka offers unique online services like Money Remittance, Astrology, Medicine Delivery, and access to over 700 Top Brands. Also If you’re interested in selling with Kapruka, Partner Central by Kapruka is the best solution to start with. Moreover, through Kapruka Global Shop, you can also enjoy the convenience of purchasing products from renowned platforms like Amazon and eBay and have them delivered to Sri Lanka.Send love straight to their heart this Valentine's with our thoughtful gifts!

BIA Project B contractor to pay penalty to SL Govt.

BIA Project B contractor to pay penalty to SL Govt.

More News..