Sri Lanka is to give India 70 percent of the stake in the Mattala Rajapaksa International Airport (MRIA) in a move that appears to strike a balance with the Hambantota Port being given to China. In terms of a Cabinet Paper now being prepared for approval, the new deal is to be a joint venture between the Airport and Aviation Services of Sri Lanka (AASL) Ltd and the Airports Authority of India (AAI).
The draft Cabinet Paper is still undergoing changes based on discussions between the two sides, sources said. There are no moves to call for fresh bids for the management of MRIA and talks are going on, as the Sri Lankan Government prefers a joint venture with India. “India is a single investor and would possess the required expertise to revamp the now virtually dead airport,” said one aviation source.
India remains on board but will not settle for anything less than a 70 percent stake owing to the burden of managing a loss-making airport.
“Given the fact that Mattala has been a loss-making project from the beginning, it would actually be safer for Sri Lanka to settle for a 30 percent stake in the joint venture rather than going for the traditional 51:49 split,” the source said. “That way, we will be absorbing a smaller portion of the losses.”
Airports are not known to become profit-making ventures overnight and usually take at least 15 years to break even. India initially wanted the joint venture for 99 years, but this is being negotiated down to 40 years. Both parties can review the joint venture every five years and come to a mutual agreement on whether the equity ratio should be changed as time goes by.
The necessary adjustments to the Civil Aviation Act (2010) will be made at the Government’s behest to accommodate the 70:30 ratio. It would not require amendments to the whole Act, a legal source said.
(Source: The Sunday Times – By Abdullah Shahnawaz)