BIA's second terminal grounded as cost soars

The Sri Lankan Government has put on hold a US$ 700 million loan from Japan for the expansion of the Bandaranaike International Airport (BIA), in view of the high cost for engineering work proposed by the Japanese construction company.

A staggering increase of Rs 30 billion in the estimated engineering cost had forced the Government to put on hold the loan until further talks were held, Transport and Civil Aviation Minister Arjuna Ranatunga told the Sunday Times.

The loan for the BIA's second terminal project is due from Japan through the Japan International Cooperation Agency ( JICA) and is being negotiated on concessionary terms to be paid in 40 years with a 15 year grace period.

The Cabinet also has not agreed on negotiating the loan because of the staggering engineering cost which amounts to about 48 percent of the cost of the project.

Mr Ranatunga said his ministry already had submitted its proposals calling for the cutting down of the cost.

Failure to reach an agreement would lead to the Government going for competitive bidding or inviting another investor for the project.

The second terminal was required for the expansion of the BIA, as the current facilities were sufficient to handle only six million passengers annually, but last year alone the number of passengers reached 10.8 million.

The second terminal is expected to increase the passenger capacity to 15 million a year.

Among the existing issues were delays in handling passengers, inadequate sanitation facilities and congestion at immigration and customs counters.

A proposal to have another terminal as a temporary measure was also held up due to a legal dispute after the tender awarded to one company was challenged. Under the proposal the terminal was to handle 2.5 million passengers.

The proposed project is expected to be completed in four years.