Passenger terminal construction: COPE asks how AASL paid Rs. 37 billion for 5% of progress

The Airports and Aviation Services (Sri Lanka) (Private) Limited (AASL) has paid Rs. 37 billion to Taisei Corporation for the Passenger Terminal Building & Associated Works construction contract, Package A, at an actual progress of about 5.44%, compared to the expected physical progress of 30%.
 
This was revealed when the Committee on Public Enterprises (COPE) met in Parliament recently under the chairmanship of MP Nishantha Samaraweera, to examine the Auditor General’s reports for the years 2022 and 2023 and the current performance of the Airports and Aviation Services (Sri Lanka) (Private) Limited (AASL), Parliament's Communications Department said.

Officials present said that due to the circular issued by the Ministry of Finance on 12 April 2022 titled “Interim Policy on Servicing of Sri Lanka's External Public Debt”, JICA had suspended the release of loan installments for the project and as a result, the contractor had stopped construction work on 09 December 2022 and had to make a payment of Rs. 37 billion, including the loss incurred as a result.

The Committee questioned how reasonable it was to pay such a large amount to Taisei Company for an actual progress of about 5.44%, even after two years of the contract period had elapsed in a project for a period of 3 years. Furthermore, the COPE discussed at length the award of contracts to a company other than the ‘Taisei’ Company to minimize the damage to the construction after the construction work was stopped, and the additional cost of Rs. 1,328.7 million was incurred for those contracts.

After the construction work of the said project was stopped, the materials and equipment purchased by the contractor in relation to the project were to be taken over by AASL, and the materials and equipment worth Rs. 1,550 million were stored in private warehouses under the contract with the local subcontractors of the contractor who stopped the project.

In this regard, the Chairman of AASL had appointed nine committees, and according to the evaluation and recommendations of the said committees, it was informed that Rs. 392,904 could be saved monthly by moving their incinerator to another warehouse. However, the Committee also drew attention to the fact that the company had to incur additional storage costs of Rs. 3.9 million from March 2023 to December 2024 due to non-implementation of those recommendations.

The COPE also questioned the construction of the Minuwangoda double-lane road. The Committee emphasized that the construction of the multi-storey car park has been hampered due to the construction of these lanes and that there are many design and construction issues in the projects of the Airports and Aviation Services (Sri Lanka) (Private) Limited.

MPs Samanmali Gunasinghe, Dharmapriya Wijesinghe, Asitha Niroshana Egoda Withana, Chandima Hettiarachchi, Prageeth Madhuranga and Lakmali Hemachandra were present in this Committee meeting.