Indo-Lankan joint venture to revive “World’s Emptiest Airport”

Indo-Lankan joint venture to revive “World’s Emptiest Airport”

Colombo, July 6 ( The Airports Authority of India (AAI) and the Sri Lankan Ministry of Civil Aviation will form a joint venture to  revive the Chinese-built Mattala  Rajapaksa  International Airport (MRIA) in South Sri Lanka, known as the “World’s Emptiest Airport.”

An announcement of the formation of an Indo-Lankan joint venture was made in the Sri Lankan parliament here on Thursday by the Minister of Transport and Civil Aviation, Nimal Sripala de Silva.

With no airlines using it, as on date, the airport, built by China with a Chinese loan in 2013, is presently being used a government grain storage facility.

Final touches were given to the basic agreement between the AAI and the Lankan government a few days ago, when an AAI delegation visited Sri Lanka and had discussions with Civil Aviation authorities.

Some more details remain to be worked out such as changing  Sri Lankan laws relating to foreign investors operating civil airports here, officials said.

Minister de Silva told parliament that the Lankan government will enter into a 40-year joint venture with India to salvage the airport. Taking part in an adjournment debate on the fate of the MRIA, de Silva asserted that there has been no move to “sell” the airport.

“The Mattala Airport has been incurring heavy losses since its inception. The accumulated loss since it was opened in 2013 is LKR  20 billion (US$ 125.7 million). We need to revitalize this dying airport, but we cannot do it alone. We need investors. In 2016, I presented a cabinet paper to this effect to seek international investors to revive the airport. However, we didn’t receive any favorable response. Then, India offered to help us. So, we are now in discussion with India to enter into a joint venture to revive the MRIA,” the minister said.

The Minister said that India would most take a 70% stake while the Lankan government will control 30%. The agreement is to be for 40 years.

On August 9, 2017, the Minister had told parliament that India had shown interest in “operating, managing, maintaining and developing the MRIA.” The Indian offer related to commercial aviation, aircraft maintenance repair and overhaul, and setting up a flying school.

The AAI, which has had several round of discussion with the government of Sri Lanka, has come up with some business plans to make the MRIA work. These are being discussed with the Sri Lankan authorities, officials said.

“The Indians are willing to invest US$ 205 million as their equity share and GOSL is to share the balance of US$ 88 million totaling to US$ 293 million as per their valuation of assets of MRIA,” the Minister de Silva had said last year.

However, that Indian offer was not accepted because the valuation figures the Indians quoted were considered to be too low. Negotiations dragged on.

But in the absence of an alternative good offer to take over the “World’s Emptiest Airport” from any party, including the Chinese, the Sri Lankan government stuck to the talks with India.

No Positive Response From China

Prime Minister Ranil Wickremesinghe told parliament on Thursday that initial discussions were held with Chinese companies, but, there was no positive response.

China had built the airport but did not show as much interest in the airport as it did in the case of the Hambantota harbor which it had built nearby.

“We are now in discussion with Indian companies. I am confident that we would be able to transform the Mattala Airport into a profit making airport which brings in many aircraft,” the Prime Minister said.

He clarified that China did not pressure Sri Lanka. “If they had  pressured, we would have been compelled to hand over the airport to them,” Wickremesinghe admitted.

The Chinese did not put any pressure though the Hambantota port, which they had built and taken on lease for 99 years, is nearby and a Chinese built industrial estate is to come up over 15,000 acres close by.

It was in December of 2016, that the government of Sri Lanka called for Expressions of Interest (EOI) to develop the MRIA through a public-private partnership. Since then, eight parties had sent in proposals for the project, one of them was the Airport Authority of India (AAI).

“We are still in discussion regarding the conditions of the joint venture. We still need to decide on matters such as future investments,” Minister de Silva clarified on Thursday.

According to sources in India, the AAI has some business propositions to turn the airport into a money spinning proposition. These are being discussed, sources said. \

Security To Be Handled By Sri Lanka

Dismissing opposition claims that the deal with India may result in a threat to national security, Minister de Silva said that India will have no say in security matters.

“All security matters will be dealt by Sri Lanka. Even the air traffic controller will be under us,” he said, adding that 70% of losses incurred by the Airport will be borne by India through the joint venture.

In addition, the Minister noted that plans were underway to extend both the railway lines and the highway up to MRIA. “Once the railway lines and the highway are connected to the Airport, both tourism and trade can be increased,” he added.

Rajapaksa Group Opposes  

MRIA came up for discussion in parliament as a result of an adjournment motion submitted by the Joint Opposition MP Kanaka Herath.

Opening the debate, Herath charged that the Government is planning to sell MRIA to India. “If we sell this airport, it will be detrimental to our country. We shouldn’t be selling our national assets. Plus, selling it to India will be a threat to our national security,” Herath said.