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Colombo, August 17 (newsin.asia): The government of Sri Lanka is to begin talks on Friday with India on the latter’s proposal to acquire a stake in the hugely loss making Mattala International Airport near Hambantota, to turn it around and make it a profitable venture, DailyFT said on Thursday in an exclusive story.
If indeed the airport is handed over to India to be run it as a Joint Venture with Sri Lanka’s airport authority, it could become a vital link between India, the ASEAN and the Far East. India has strategic as well as far-reaching commercial interests in the airport.
Earlier, the Sri Lankan cabinet had decided to appoint a committee comprising several senior Secretaries to Ministries to study the proposal made by the Airports Authority of India (AAI) to operate, manage and maintain the airport.
By the end of 2016 the Mattala airport had run up a cumulative loss of US$ 112.9 million.
There had been proposals, besides that from India, to run the airport .But none was as comprehensive as the Indian one, DailyFT said, quoting the Secretary to the Ministry of Transport and Civil Aviation.
But Cabinet spokesman Rajitha Senaratne had said that Sri Lanka would also consider other proposals from other countries, if any.
Be that as it may, it appears that, finally, a decision to enter into a deal with India may be taken for geo-strategic reasons.
This is in view of India’s deep concern over the leasing out of the nearby Hambantota harbor to China for 99 years giving a 70% stake to it.
According to DailyFT, India had asked for a 70:30 ratio in the stakes in the Mattala airport, taking 70% for itself for 40 years. The Chinese company CMPort had been given 70% stake in Hambantota harbor. But Sri Lanka is reportedly pitching for 49% for India and 51% for Sri Lanka, to fob off public criticism which plagued the agreement with China.
The Airports Authority of India is reportedly ready to invest US$ 205 million as its equity, while expecting their Sri Lankan counterpart to give the balance of US$ 88 million. The Indians have valued the airport at US $ 293 million.
Sri Lanka’s Concerns
The Sri Lankan cabinet last week gave the Transport and Civil Aviation Ministry the green light to appoint a suitable Cabinet-Appointed Negotiation Committee (CANC) to evaluate a proposal by the Government of India to enter into a Joint Venture to develop the Mattala Airport.
The committee will go into the question of what functions could be included under the JV and what should be retained by the ministry. As per present plans only the commercial operations will be assigned to the JV, the Transport Secretary told DailyFT.
India’s Interests
New Delhi is concerned that, despite assurances to the contrary, the Chinese might use their financial clout to use the port for military and intelligence gathering purposes to the detriment of India, which aims to be numero uno in the Indian Ocean Region.
Besides, India might need the Mattala airport not only to maintain a presence in Southern Sri Lanka for geo-political purposes, but also to build ties with the prosperous ASEAN countries, as part of Prime Minister Narendra Modi’s “Act East” policy which is an extension of the earlier “Look East” policy.
Among the parameters of Modi’s “Act East” policy is to improve communications through road, rail, sea and air between India, its eastern neighborhood, and ASEAN.
This is one reason why India has been keen on having a presence in Trincomalee harbor in the Eastern seaboard of Sri Lanka. But the development of Trincomalee harbor and its hinterland are a long way off.
In the absence of Trincomalee and Hambantota harbor, Mattala airport could be a useful staging post for India’s links with ASEAN and also the Far East.
In this context is it any wonder that at the next Indian Republic Day function at New Delhi on January 26, 2018, India plans to have the Heads of Government or State of all the ASEAN countries as Chief Guests?
(The featured picture at the top shows the Mattala International Airport in South Sri Lanka, known as the world’s emptiest airport)
