CAAB ordered to pay over Tk1,000cr in Dhaka airport third terminal dispute
Despite global disruptions such as the Covid-19 pandemic and the Russia–Ukraine war, the terminal project was completed within the contractual framework, but disagreements over additional costs and payments triggered the dispute.
Highlights:
- Dispute board directs CAAB to pay over Tk1,000cr to Aviation Dhaka Consortium (ADC)
- ADC completed construction of third terminal at Dhaka airport in January 2024
- Payment withheld due to audit observations
- Delays in appointing contractor for third terminal adding cost for contractor
- CAAB says the problem will take time to resolve
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 decision in an international dispute related to the construction of the third terminal at Hazrat Shahjalal International Airport.
The verdict was delivered in Dhaka last week by a three-member international dispute board formed to resolve the long-running financial disagreement between CAAB and the contractor, officials familiar with the matter said.
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A senior civil aviation official, speaking on condition of anonymity, said the claimed amount had remained unpaid due to audit objections. "The money was already due, but we withheld payment following audit observations," the official said, adding that CAAB has 28 days to challenge the decision. If unresolved, the matter may proceed to arbitration, where a final award would be binding.
Officials said the ministry will be briefed on the ruling and further steps will be taken based on its directives.
The Aviation Dhaka Consortium was formed by Japan's Mitsubishi Corporation and Fujita Corporation 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 decision.
Diplomatic correspondence from countries linked to the consortium earlier highlighted concerns over delayed payments, noting that although the project was completed on 2 January 2024, a substantial portion of certified dues remained unsettled.
The letters also said delays in appointing an operator for the new terminal forced the contractor to continue maintenance, operations and security without compensation, resulting in mounting costs.
Despite global disruptions such as the Covid-19 pandemic and the Russia–Ukraine war, the terminal project was completed within the contractual framework, but disagreements over additional costs and payments triggered the dispute.
Officials and diplomats have warned that failure to resolve the issue promptly could escalate legal proceedings and potentially affect investor confidence, underscoring the need for an amicable settlement.
While asked about the issue, CAAB Chairman Air Vice Marshal Mostafa Mahmud Siddiq told The Business Standard that the authority is working on this matter, and it will likely take a long time to resolve.
