Sri Lanka has undergone many difficulties, and it is only now, as the economy recovers, that things appear to be improving. One of the main reasons for this is the uptick in the tourism industry; with ongoing promotions, the country has been welcoming many tourists into the country following the lull in arrivals.
Given this situation, the question is whether the Bandaranaike International Airport (BIA) has the appropriate and required infrastructure to receive an exponential number of tourists. Records show that the current BIA terminal has been accommodating passengers at a higher capacity than it can handle.
When this subject comes into the spotlight, questions automatically arise as to the current status of the construction of the BIA Terminal II, which was suspended in 2022, and when it will be restarted.
The construction of a partially-completed yet extensive Terminal II, capable of handling nine million passengers per annum, was suspended in 2022 by the contractor Taisei Corporation because the Japan International Cooperation Agency (JICA) stopped funding the project on account of Sri Lanka declaring itself bankrupt.
The Sunday Morning Business spoke to Airport and Aviation Services (Sri Lanka) Ltd. (AASL) Chairman Athula Galketiya regarding the recommencement of Terminal II’s construction.
Providing a brief explanation, Galketiya said: “JICA funded the project and the contractor was Taisei Corporation. With the suspension of funds by JICA due to the economic crisis, Taisei Corporation opted for a self-termination in 2022.
“Therefore, the project was suspended, partly due to a substructure situation, resulting in the termination of the project halfway through. Following its termination, we worked on the claims submitted by Taisei Corporation as per the contract document.”
Current status of construction
At present, the AASL has finalised and forwarded the claims to the Cabinet, which has approved them, according to Galketiya. The claim had already been sent to JICA through its consultant and payment was due to the former contractor, he added.
“When the previous contractor self-terminated, the foundation of Terminal II had been partly completed, yet required completion up to the building’s ground level. About 10% of construction has been completed, so it has remained for about one-and-a-half years without the foundation, which is not good for the building in structural terms.
“Therefore, we decided to complete the foundation and move it up to the ground level, keeping the requisite pile caps and ground beams ready. By November this year, the entire project will be completed up to the ground level.
“We have floated the tender from AASL funds and have commenced completion of the foundation up to the ground level, which is called the substructure. The new contractor can begin from the ground level of the building, which is called the superstructure,” Galketiya said.
With the previous contractor having completed only a part of the foundation, the AASL Chairman pointed out a technical danger in safety and operational conditions. He further noted that the contract had been awarded to Access Engineering PLC, a Sri Lankan company, with Cabinet approval.
The latter had commenced the contract on 25 April and construction was due to be completed by November this year, he added. With a contract amount of Rs. 3.5 billion, the bidding process had been followed and Cabinet approval had been received, Galketiya elaborated.
$ 400 million short
The AASL Chairman continued: “Meanwhile, we have finalised the engineer’s estimate for the balance work to complete Terminal II with the Japanese consultant, and have found that there is a shortfall of around $ 400 million to complete the project, in addition to the JICA funds. We are now awaiting word from JICA that it is commencing to fund that project plus the $ 400 million in debt financing.
“JICA has promised that it will recommence funding subsequent to Sri Lanka’s restructuring, although it has not assured us about the gap financing of around $ 400 million. If we do not receive debt financing, we will phase out the project and construct a part of Terminal II, while we will have to find another source to complete the other part. This is the current situation.”
Galketiya said that the matter had to first be discussed with JICA, and that there would be no issues if JICA was in favour of providing the funds since the AASL could carry out the same contract.
“We have not decided yet, but with the estimates available, we will have to make an immediate decision if gap financing is not provided by JICA,” he said.
According to the AASL, developing Colombo as a destination for aviation and the construction of Terminal II of the BIA are major requirements for the country’s socioeconomic development.
Ports, Shipping, and Aviation Ministry sources revealed to The Sunday Morning Business that the China Harbour Engineering Company (CHEC) had expressed interest in completing the abandoned Terminal II project due to JICA having terminated funding and Taisei having suspended work. However, when asked, Galketiya said that they were unaware of this.
Meanwhile, Minister of Ports, Shipping, and Aviation Nimal Siripala de Silva said that restoration work was being carried out at present with available funds in order to maximise the benefit of what had already been completed with regard to BIA Terminal II.
“JICA gave the loan and when we declared ourselves bankrupt, it said that it did not offer loans to bankrupt nations and stopped providing money. Therefore, the contractor had to abandon the work because they were not getting paid,” the Minister noted.
JICA assurance
De Silva further said: “When the Japanese Finance Minister came about two months ago, he met the President as well as me. JICA assured that it would grant the loan once the debt restructuring process was over.
“Therefore, we are waiting for the debt restructuring to be concluded. Once it is completed and when we get the loan, we will recommence the work. We cannot predict when the project will resume, but we are eagerly awaiting the completion of the debt restructuring process.”
As the tourism industry was also developing exceptionally well, it was essential to resume and complete the construction of Terminal II, de Silva asserted.
“We have already commenced work on the substructure, but we need money to complete the project. Since the airport is expanding, the conditions at the airport terminal are very important,” he noted.
Speaking to The Sunday Morning Business, Ministry of Ports, Shipping, and Aviation Secretary K.D.S. Ruwanchandra stated that there would be further delays in commencing the construction of Terminal II but assured the construction of at least the basic requirements of the terminal by obtaining funds from the AASL.
“The construction is currently taking place on a small scale to ensure that the basics are ready. In terms of expanding capacity, we are now constructing a temporary terminal for departures with a capacity of 30 departure counters,” he said.
“We have yet to learn when the Terminal II construction process is to commence. It will depend on the completion of the debt restructuring process,” he added.
There is a critical need for Terminal II of the BIA, with the airport currently handling more passengers than its capacity allows. In the event of significant flight delays or other emergencies, there is a risk of insufficient space to accommodate passengers.