CAAB faces mounting pressure as HSIA T3 loan repayments begin

Dhaka : The Civil Aviation Authority of Bangladesh (CAAB) is preparing for a major financial challenge as repayments for the loans used to build Dhaka Airport's Third Terminal are set to begin in June, even though the facility is unlikely to start generating income before 2027.

Under the repayment schedule for a Japanese loan worth nearly BDT 17,000 crore, CAAB is expected to pay around BDT 1,200 crore in June and another BDT 1,000 crore in December this year. Officials said, as per reports, the first year's repayment burden alone could absorb almost all of the organization's annual profits.

CAAB had earlier managed to delay the repayments by three years after the original schedule targeted 2023. However, with the grace period ending, the authority must now start making payments regardless of whether the terminal becomes operational.

Officials within the aviation sector fear the repayments could strain CAAB's finances and affect airport operations and development projects across the country. Concerns have also emerged over whether the authority may need to use its reserves to continue routine maintenance, safety improvements, and procurement of critical airport equipment.

The delay in launching the Third Terminal has largely been linked to unresolved negotiations over management and revenue-sharing arrangements with a Japanese consortium. The consortium includes Japan Airport Terminal Company, Sumitomo Corporation, Nippon Koei, and Narita International Airport Corporation.

Although the terminal is almost complete, disagreements over operational control prevented it from meeting its planned launch target in 2024. According to CAAB officials, negotiations slowed considerably during the tenure of the interim administration before discussions resumed earlier this year.

Aviation analysts argued, the delays have created unnecessary financial pressure. Industry insiders said, CAAB should have finalized an agreement immediately after construction was completed so that operational income from the terminal could help offset loan repayments.

Even after an agreement is signed, the terminal is unlikely to open immediately. CAAB Chairman Air Vice Marshal Md Mostafa Mahmood Siddiq recently said it could take several months to complete negotiations, followed by a lengthy operational testing phase known as ORAT (Operation Readiness and Airport Transfer). As a result, the terminal may not become fully operational until 2027.