Sri Lanka leases white elephant airport built with Chinese loans, BA

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Sri Lanka said Friday it has leased a white elephant international airport built with Chinese loans to a foreign joint venture as the island’s bankrupt government seeks to get rid of loss-making assets.

The small airport near a nature reserve on the south coast opened in 2013 but was immediately plagued with problems and has been a major burden on the public purse ever since.

Government spokesperson Bandula Gunawardana told reporters that the cabinet had awarded a 30-year lease to a joint venture between India’s Shaurya Aeronautics and Russia’s Airports of Regions Management Company.

He gave no further financial details but said only four other companies had expressed an interest in managing the isolated airport, which currently has no scheduled flights.

The airport is named after former President Mahinda Rajapaksa, who borrowed heavily from China for infrastructure projects that quickly became commercial failures.

Since receiving a rescue package from the International Monetary Fund last year, Sri Lanka has sought to privatize a large number of loss-making state-owned enterprises.

Mattala airport is in the middle of a bird migration route, with several planes forced to be grounded after attacking birds in the air.

The Sri Lankan military was once forced to deploy hundreds of troops to clear deer, wild buffalo and elephants from the airport runway so that operations could continue.

The first foreign airline to operate from the facility was Air Arabia in 2013, but they withdrew after six weeks of scheduled services.

Flydubai shut down in June 2018 without explanation, but officials said poor passenger traffic may have prompted the budget carrier to leave.

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National carrier Sri Lankan Airlines stopped flying to Mattala in 2015, shortly after Rajapaksa was defeated in that year’s presidential election.

The company later said it saved $18 million annually by not flying into the isolated airport.

Debts owed to China are partly responsible for an unprecedented financial crisis that pushed Sri Lanka to default on its $46 billion foreign debt by 2023.

In 2017, when Sri Lanka defaulted on a huge Chinese loan, it allowed China Merchants Port Holdings to take over a nearby port in Hambantota. The deal, which gave the Chinese company a 99-year lease, raised fears about Beijing’s use of “debt traps.” “in exercising his influence abroad.

  • Published on Apr 27, 2024 at 9:50 AM IST

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