Dar es Salaam. The deadline for completion of the construction of Terminal III at the Julius Nyerere International Airport (JNIA) has been pushed back to the end of the year due to financial constraints.
The government needs to secure a total of Sh279.7 billion in order to complete the construction of the Sh560 billion facility.
The terminal, whose launch was scheduled for June, has now been pushed back to December, according to the Minister for Works, Transport and Communications, Prof Makame Mbarawa, who toured the facility yesterday.
This is the second time the deadline is missed. The first one was last August.
According to media reports, initially the construction of the multi-billion passenger complex was scheduled to take 33 months from June 2013, but due to various factors, mainly financial constraints, the project implementation had to be extended.
The acting director general of the Tanzania Airports Authority (TAA), Mr Salum Msangi, told Prof Mbarawa during a briefing that the government owed contractors over Sh23 billion while some building materials were stuck at the port due to delays in paying the Value-Added Tax (VAT) by the contractors.
BAM International is implementing the project. The construction of the main terminal structure that will cater for about 6 million passengers annually includes parking lots, access roads, platforms and taxiway.
According to the briefing, the project has been completed by 66 per cent but lack of funds and delays in paying the VAT for the construction materials are some of the challenges facing the project.
According to the contract signed by the government and the contractors, construction materials were exempted from the VAT but a new law abolished the exemptions.
The government then committed itself to pay the VAT.
However, building materials take too long to be cleared, with a lot of them remaining stuck at the port due to delays in paying the VAT, according to the briefing.
“As of yesterday, Sh1.36 billion ought to have been released by the Treasury and go towards the clearance of the materials.
Out of that amount, Sh960 million is for the X-rays which, according to experts, are not supposed to be exposed to too much heat,” said Mr Msangi during the briefing.
“This kind of delay is not only prolonging the construction activities; it is also adding costs of the project. At the same time, there are machines that end up being unsuitable due staying without being used for too long. The government might be forced to pay for them all the same,” he added.
Responding to some of the key issues raised in the briefing, Prof Mbarawa said the government would pay all the arrears as well as the VAT for the materials to be released from the port.
He also gave assurances that the government would complete the project using domestically sourced funds.
“The government is not planning to borrow anymore from outside for this project. We will complete it using locally obtained funds. All arrears will be paid provided the government receives proper documents through proper procedures.
“We will also pay for the materials to be released from the port,” said Prof Mbarawa.
The government borrowed euros 113.24 million (about Sh250 billion) from HSBC Bank for the project.
The first phase of the project was expected to increase the airport’s capacity to 3.5 million passengers while phase two will increase the number by a further 2.5 million passengers annually.
The new terminal was designed to cope with the expected growth of international air traffic, leaving terminal II for domestic flights.
Prof Mbarawa said the government was implementing airport projects in more than 10 regions in Tanzania including those in Dar es Salaam, Mwanza, Kilimanjaro, Songwe, Rukwa (Sumbawanga), Kigoma and Shinyanga.