Approvals for the long-delayed Bandaranaike International Airport (BIA) Terminal II project have been formally secured under an established cost ceiling, with financial negotiations nearing completion ahead of contractor selection, targeted for November.
Speaking on the financial framework established for the joint project with the Japan International Cooperation Agency (JICA), Minister of Ports, Civil Aviation, and Energy Anura Karunathilaka confirmed that strict budget boundaries had been set.
“We have secured approval along with a cost ceiling,” he said. “If there is any funding gap, it will be covered through external financing of Airport and Aviation Services (Sri Lanka) Ltd. (AASL).”
Authorities are in the final stages of evaluating bids submitted by two prospective Japanese contractors vying to serve as main contractor for the completion of the landmark infrastructure project.
Addressing the ongoing procurement process, the Minister disclosed that the tender evaluation had narrowed the field to a single candidate after the other applicant had failed to meet the technical criteria.
“There were two bidders initially, but one did not qualify,” Karunathilaka said. “We opened negotiations with the technically qualified bidder and financial negotiations are now underway.”
Underlining the Government’s commitment to advancing infrastructure timelines, he confirmed the target date for contract execution.
Authorities noted that all processes related to securing the additional loan facilities required for the project had been completed. Final agreement discussions are expected to conclude shortly and construction is targeted to commence in November once the contractor is finalised the same month. The project is expected to be completed in 30 months.
Japan has agreed to expedite the long-delayed construction of the second passenger terminal at the BIA. A JICA delegation led by JICA Senior Vice President Hara Shohei and JICA Chief Representative Honzu Shigeo confirmed this development during recent meetings with Minister Karunathilaka.
The project, which had previously been launched but later stalled, is set to resume following successful high-level discussions between President Anura Kumara Dissanayake and the Japanese Government. As a result of these negotiations, Japan agreed to restart its support for the major infrastructure initiative.
Following the presidential-level discussions, several rounds of talks were held between the Minister of Ports and Civil Aviation, the Japanese Ambassador to Sri Lanka, and senior JICA officials to finalise arrangements for the project’s revival.
The contract for the construction of the BIA Terminal II project, which involves the construction of a multi-level terminal, was valued at $ 564 million and was initially awarded to Taisei Corporation in 2020.
However, following the stoppage of construction work in 2020 due to the funding freeze imposed by JICA after Sri Lanka’s default, Taisei Corporation terminated its contract with Sri Lanka.
The construction of the multi-level terminal is part of Package A of the BIA expansion project, initially estimated to cost Rs. 153 billion. It was to be largely funded by the Special Terms for Economic Partnership (STEP) concessionary Official Development Assistance (ODA) loan granted by JICA, amounting to Rs. 131.5 billion (¥ 74.4 billion) at an interest rate of 0.1% per annum. The remaining Rs. 21.5 billion was to be funded by AASL.
With regard to Package A, AASL entered into two agreements with JICA: the first in March 2012 for ¥ 29 billion and the second in March 2016 for ¥ 45.4 billion.