Terminated Spanish contractor demands compensation from CAAN

Posted on by S Karki

Spanish Contractor Constructora Sanjose who took the responsibility of Air Transport Capacity Enhancement Project (ATCEP) of Tribhuvan International Airport (TIA) had asked for a compensation following their termination of the contract by the Civil Aviation Authority of Nepal (CAAN) last December.

Sanjose has filed a compensation claim for a $101 million. CAAN was compelled to terminate the contract due to unsatisfactory progress made by the Spanish company in the allocated time frame however, the company’s official claimed that the contract was breached although they had 457 days remaining.

The project authorities on the other hand reported that the company was provided with a number of opportunities to expedite and enhance the performance but it did not happen as expected so, termination was only the option.

CAAN is expecting counterclaim from Sanjose and has also approved the management’s proposal to hire a mediator for the case.

Spanish contractor Constructora Sanjose delayed the work for nearly 3 years and started in 2013 only. But by end of 2016, only 20% work was completed and CAAN had breached the contract and divided the project in 3 different packages among which runway expansion (NCB 001) contract was given to the Chinese company.

At present, China’s Shanxi Construction Engineering Group Co. Ltd. has taken the responsibility of the ATCEP however, this company is also delaying the expansion project and CAAN is again showing willingness to end the contract.

The construction work was due to start from November last year but even after 5 months from the date, the work has not been started yet. After no response from Shanxi to repeated call from CAAN, the authority is set to break the contract with the company.

TIA is desperately in need of expansion project as the air traffic and congestion level has reached its saturation point. With the contractor companies delaying and hesitating towards the project, it could take a long period of time for the completion. So, the respective authorities are required to take the matter seriously and expedite the expansion project of the only international airport of the country.

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An Aviation Enthusiast working with Aviation Nepal.