CAAB rejects Tk6,300cr audit irregularity allegations over 3rd terminal project

Highlights:

• CAAB says Tk6,300cr refers to audit objections, not proven irregularities
• Authority insists all payments followed contract terms and government approvals
• Tk1,077cr excluded from project costs after settlement committee review
• Govt to investigate corruption allegations; commercial operations targeted by Dec

The Civil Aviation Authority of Bangladesh (CAAB) has rejected allegations of Tk6,300 crore in financial irregularities in the third terminal project at Hazrat Shahjalal International Airport, saying the amount refers to audit objections rather than proven corruption or overpayments.

In a statement issued today (25 July), CAAB responded to reports citing an audit by the Foreign Aided Projects Audit Department (FAPAD) under the Office of the Comptroller and Auditor General (OCAG), which questioned alleged overpayments in the Japanese-funded project.

According to CAAB, FAPAD conducted the audit during fiscal year 2024-25, when the project had incurred expenditures of Tk12,745 crore. The audit raised objections over alleged overpayments amounting to Tk6,300 crore.

The aviation regulator said such a finding was "unacceptable", arguing that it would be unreasonable for a project containing 14,824 bill-of-quantity (BOQ) items to have been implemented correctly if nearly half of the expenditure had genuinely been overpaid.

CAAB said the project's Dispute Board reviewed the matter under the construction contract and concluded that audit objections alone could not justify withholding payments to the contractor or recovering money from certified bills.

Following the board's opinion, the Ministry of Civil Aviation and Tourism formed an amicable settlement committee in line with contractual provisions.

The committee excluded Tk1,077 crore from the project's payable costs, while the remaining disputed amount was found to be payable under the contract, according to CAAB.

The authority said responses to the remaining audit observations were being prepared, adding that audit objections in foreign-aided projects are routine and are generally resolved after detailed explanations are submitted.

CAAB maintained that all payments were made strictly under the project's contractual framework and with the required government approvals.

CAAB rejects spending, pricing allegations

Responding to reports that Tk3,200 crore had been spent without approval, CAAB described the allegation as "factually incorrect".

It said the original development project proposal (DPP), worth Tk13,610 crore, was approved in October 2017. A revised DPP worth Tk21,399 crore received government approval in December 2019 following an international tender evaluation.

A second revised DPP, with a project cost of Tk21,365 crore, including Tk3,267 crore for variation works, was approved by the Planning Commission on 7 December 2025 following recommendations from the Project Implementation Committee, the Project Steering Committee and the ministry concerned.

According to CAAB, Tk20,347 crore has so far been spent, remaining within the approved project cost.

The authority also rejected allegations that ornamental trees had been procured at inflated prices, saying payments were made according to unit rates specified in the international contract, which covers 14,824 BOQ items.

It similarly dismissed claims of irregularities involving pond development, soil disposal, Covid-19 acceleration payments and variation works, saying these were executed under the FIDIC contract framework and approved by the project's international engineering consultant, NOCD JV, with government authorisation where required.

Govt to investigate allegations

The clarification came after State Minister for Civil Aviation and Tourism M Rashiduzzaman Millat said the government would investigate allegations of corruption and fake variation works carried out during the previous Awami League administration.

He said authorities would identify those responsible for approving any irregular payments or variation works and take legal action against anyone found guilty.

"There will be no amicable settlement over the corruption allegations. Anyone found to have been involved will face legal action in accordance with the law," the state minister added.

CAAB also said recent reports carried "partial and context-free" information regarding the project's cost, variation works, contract implementation and financial management that could mislead the public.

Although construction of the third terminal was completed nearly two years ago, commercial operations have been delayed due to operational readiness, technical testing, compliance with international standards and coordination with stakeholders, the authority said.

It added that preparations are now in their final stage and the government is working to begin commercial operations at the terminal by December 2026.