Diplomatic efforts are underway to resolve a financial dispute between the contractor of Hazrat Shahjalal International Airport's (HSIA) third terminal and the Civil Aviation Authority of Bangladesh (CAAB), after the issue drew the attention of both the South Korean and Japanese embassies in Dhaka.
The dispute centres on unpaid and additional cost claims by the contractor, Aviation Dhaka Consortium (ADC), against CAAB following the completion of the HSIA third terminal. The consortium is a joint venture comprising South Korean and Japanese companies.
The ambassadors of South Korea and Japan sent separate letters to the Civil Aviation and Tourism adviser on July 20 and 30, respectively, urging a prompt resolution to the prolonged disagreement over the contractor's financial claims.
In his letter, South Korean Ambassador Park Young-Sik noted that the project was successfully completed on January 2, 2024, as recorded in the taking-over certificate (TOC).
"After the issuance of the TOC, the employer, CAAB, became responsible for the care of the project. However, due to the employer's failure to appoint an operator for the new terminal to date, the contractor, ADC, has had to continue maintenance, operations, and security for the project," he wrote.
The ambassador added that the consortium has been incurring additional costs without reimbursement and called for a "timely resolution" to the dispute, stressing that an amicable settlement would positively influence future Korean investments in Bangladesh.
Echoing similar concerns, Japanese Ambassador to Bangladesh Saida Shinichi wrote that the Government of Japan was "increasingly worried" about the outstanding payments and additional costs.
"Despite substantial physical completion of the works by the contractor, a significant amount of certified payments remains pending, and CAAB has yet to accept the facility. As a result, ADC continues to bear ongoing maintenance and operational costs," his letter read.
He added that resolving the matter "through dialogue and mutual understanding would serve the best interests of both parties".
Aviation Dhaka Consortium, a joint venture comprising Japan's Mitsubishi Corporation and Fujita Corporation, along with South Korea's Samsung C&T Corporation, implemented the third terminal project.
The dispute, involving claims of around Tk 30 billion, remains unresolved. While CAAB considers the contractor's additional payment claims unjustified, ADC maintains they are legitimate under the project agreement.
Due to the impasse, CAAB has yet to take formal possession of the terminal, preventing the operation of its import cargo complex -- an issue that has gained renewed urgency after a devastating fire recently destroyed the old cargo complex at HSIA.
Following the fire, CAAB sought ADC's consent on October 19 to temporarily use the new terminal's import cargo facility. However, the contractor declined the request, citing the unresolved contractual matters.
A senior CAAB official, speaking on condition of anonymity, said the Ministry of Civil Aviation and Tourism (MoCAT) and CAAB have held multiple meetings to address the issue and have formed a seven-member dispute board to review the contractor's claims and recommend a settlement.
CAAB Chairman Air Vice Marshal Md Mostafa Mahmood Siddiq acknowledged that there was a discrepancy of about Tk 10 billion between the amount claimed by the contractor and the figure assessed by CAAB. "We are working to reach an amicable resolution," he said.
The Tk 213.99 billion project was launched on December 28, 2019, while the ADC signed the construction contract on January 14, 2020, for Tk 155.63 billion.
Except for minor outstanding works, such as boarding bridges and interior fittings for VVIP facilities, the terminal was practically completed by December 2023, and the taking-over certificate was issued the following month.
ADC has maintained that it cannot hand over full control of the terminal due to CAAB's delay in appointing an operator -- a responsibility that lies outside the contractor's scope.
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