Infrastructure
Indian-Russian Consortium To Operate 'World’s Emptiest Airport' In Sri Lanka
Amit Mishra
Apr 26, 2024, 05:30 PM | Updated 07:01 PM IST
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A Russia-India joint venture will operate Sri Lanka’s loss-making Mattala Rajapaksa International Airport in Hambantota, a cabinet statement said, without mentioning the deal value.
The Sri Lankan Cabinet, on 9 January, had approved the calling of Expression of Interest from the parties interested in managing the airport. Following this call, five proposals were submitted.
After careful consideration, the cabinet unanimously agreed to award the management contract to Shaurya Aeronautics (Pvt) Ltd of India and Airports of Regions Management Company of Russia for a duration of 30 years.
Mattala Rajapaksa International Airport (MRIA), named after former president Mahinda Rajapaksa, was one of the major infrastructure projects of Rajapaksa’s nearly a decade-long rule.
Situated 241 km southeast of Colombo, the airport was inaugurated in March 2013 with a capacity to serve one million passengers annually.
However, controversy has surrounded the project due to its low flight traffic, environmentally sensitive location, and persistent financial losses. In fact, the $210 million facility has earned the moniker of the "world’s emptiest airport" owing to its underutilisation.
Financed primarily through high-interest Chinese commercial loans, the airport was constructed at a cost of $210 million, with $190 million sourced from the China Exim Bank.
In May 2022, Colombo defaulted on its foreign debt following a drastic depletion of foreign exchange reserves, leading to the worst financial crisis in over seven decades.
Following this, in October 2023, Sri Lanka reached a preliminary debt restructuring agreement with the Export-Import Bank of China (China Exim Bank) to cover about $4.2 billion of the country's outstanding debt, a crucial step for Sri Lanka to get the second tranche of a $2.9 billion bailout package approved in early December by the International Monetary Fund.
Notably, the airport loan is part of $4.2 billion borrowed for other infrastructure projects.
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