CAAB to pay over Tk1,000cr to consortium over third terminal dispute

The Civil Aviation Authority of Bangladesh (CAAB) has been directed to pay more than Tk1,000 crore to the Aviation Dhaka Consortium (ADC) following an adverse ruling in an international dispute over the construction of the third terminal at Hazrat Shahjalal International Airport.

The decision was delivered in Dhaka last week by a three-member international dispute board tasked with resolving the prolonged financial disagreement between CAAB and ADC, according to officials familiar with the development.

A senior Civil Aviation official, requesting anonymity, told The Business Standard that the amount in question had remained unpaid due to audit objections.

“The dues had accumulated over time, but we withheld payment following audit observations. CAAB now has 28 days to challenge the decision. If objections are not resolved, the matter could move to formal arbitration, and an arbitration award would be binding,” the official explained.

Officials said the ministry would be briefed on the verdict, and further action would be taken based on its directives.

The Aviation Dhaka Consortium was formed by Mitsubishi Corporation and Fujita Corporation of Japan, along with South Korea’s Samsung C&T Corporation, to execute the third terminal project.

The dispute board, comprising adjudicators from Malaysia, the United Kingdom, and Germany, examined financial claims and counterclaims submitted by both sides before issuing its ruling.

In a letter dated 20 July, the ambassador of a country involved in the consortium informed the aviation adviser that while the third terminal project at Hazrat Shahjalal International Airport represents a landmark achievement for Bangladesh’s infrastructure development, it is now facing uncertainty due to unresolved financial issues.

The letter noted that Samsung C&T, a principal ADC partner, has completed its contractual obligations but has yet to receive a significant portion of the outstanding payments.

Despite global disruptions such as the Covid-19 pandemic and the Russia–Ukraine war, the project was completed on 2 January, 2024. However, according to the consortium, CAAB has not fully met its payment obligations under the agreement.

The letter further stated that delays in appointing an operator for the new terminal have compelled ADC to continue maintenance work without compensation, resulting in mounting operational costs and financial losses.

In separate correspondence, another ambassador also raised concerns over pending certified payments, noting that although a substantial portion of the construction has been completed, CAAB has yet to formally take over the facility.

This has forced the contractor to shoulder ongoing maintenance expenses.

The communication warned that failure to resolve the matter promptly could push the contractor toward legal remedies, potentially escalating the dispute to arbitration.

Such a development, it cautioned, could harm Bangladesh’s global standing and affect future foreign investment prospects.