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SL bound to begin repaying JICA’s 2012 BIA loan 

11 Feb 2022

 
  • First instalment to be paid next month 
  • Govt. yet to negotiate with JICA for further time as grace period ends
  Sri Lanka will have to commence the repayment of the ¥ 29.0 billion loan obtained from the Japan International Co-operation Agency (JICA) in March 2012 for “Package A” of the Bandaranaike International Airport, Katunayake (BIA) expansion project from March onwards with the expiration of the 10-year grace period. Speaking to The Morning Business, sources within the JICA disclosed that Sri Lanka will be liable to pay its first instalment of ¥ 475,000 (roughly Rs. 830,266) in March.  They further disclosed that the loan granted for “Package A” of the BIA expansion project involved a grace period of 10 years and a repayment period of 40 years. According to them, this loan is peculiar, in that the repayment has commenced despite the terminal not being functional. However, they claimed that this wasn’t due to a fault on their part and that the current situation is due to delays from Sri Lanka’s side. Speaking to The Morning Business, Airport and Aviation Services (Sri Lanka) (Pvt.) Ltd. (AASL) Chairman Maj. Gen. (Retd.) G. A. Chandrasiri admitted that Sri Lanka would have to start repaying the ¥ 29.0 billion loan obtained from JICA for “Package A” of the BIA expansion project despite the terminal still being under construction and not generating any income. Therefore, he stated that AASL is seeking to reschedule the payment period of the loan and has informed the Finance Ministry of this need. According to him, since this is a loan taken by the Government, discussions for the rescheduling of payment must be carried out at a national level. When The Morning Business reached out to Ministry of Finance and Treasury Secretary S. R. Attygalle, he stated that discussions had commenced between parties with regard to the rescheduling of the repayment period but was unable to provide details on the current status of such discussions.   The AASL Chairman further stated that the construction of the expansion project was supposed to commence in 2014 and it was expected to be operational by 2017. He claimed that during the previous regime, no progress had been made in terms of the project and that the only development during the five years was the change of the roof in the plan. According to him, when the current regime came into power, they had, as soon as possible, commenced the construction of “Package A” of the BIA expansion project, which is currently scheduled to be completed by 2023. “How are we going to pay the loan when we are not receiving any income from the terminal? That is why we are requesting for a further seven-year grace period. Then by that time, we would have started earning from the terminal and would have sufficient funds to pay back the loan. We have currently made this request from the JICA and the Government,” stated Chandrasiri.  “Package A” of the BIA expansion project is estimated to cost Rs. 133 billion, which will be largely funded by the Special Term for Economic Partnership (STEP) concessionary Official Development Assistant (ODA) loan granted by JICA amounting to Rs. 131.5 billion (¥ 74.4 billion) at a 0.1% interest rate per annum obtained under the above-mentioned agreements on the condition that the project contract is offered to a Japanese contractor. The remaining Rs. 21.5 billion will be funded by AASL. With regard to “Package A,” the AASL entered into two agreements with the JICA; the first agreement was entered into in March 2012 for ¥ 29.0 billion and the second agreement was entered into in March 2016 for ¥ 45.4 billion.  The construction of “Package A” commenced only in December 2020 and due to the significant delays in commencing the project, AASL was forced to pay a sum of around Rs. 328 million as liability fees or commitment charges to the JICA as of 20 April 2021 as per the data provided in the Auditor General’s report for 2020.


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