Duty free tender all at sea?

The delay and confusion over the tenders for duty free business in the Bandaranaike International Airport (BIA) has caused concern.

The duty free tenders for BIA were floated by Airport and Aviation Services (Sri Lanka) Ltd. in May. The tenders were submitted and the price bids were reportedly opened in the first week of July. 

Both the current operators were given extensions till mid-December to ensure continuity of the service at the airport. 

The tenders have reportedly attracted five responsive bids by leading global duty free operators. The core category duty free shops are the main cash cows for Airport and Aviation Services (Sri Lanka) Ltd., and contribute more than 60% of the non-aeronautic revenue earned by the airport.

The Tender Procurement Committee is yet to communicate the outcome of the tender even after 4.5 months. With the current bids the airport will be able to nearly double the revenue earned during the previous years. 

“If the decision to award the contract is further delayed, the airport and the Government of Sri Lanka will lose huge amounts of revenue due to the delay in deciding the contract amounting to almost Rs. 30 billion of additional revenue,” sources said. 

While the country is currently going through a phase where every attempt is being made to garner additional revenue by additional taxes, fines and levies which have been announced in the 2017 Budget, the private sector is wondering what the motivation could be behind such a protracted delay in awarding the contracts.