Sri Lanka turns to Indian and Russian companies to manage Chinese-funded Airport

Reuters says that Sri Lanka has decided to transfer management of its $209 million Chinese-funded airport to two companies from India and Russia, according to a statement from the cabinet on Friday.

The move comes as the country aims to mitigate losses incurred by its state enterprises.

The Mattala Rajapaksa International Airport (MRIA), financed by the China EXIM Bank, has been a subject of controversy since its establishment in 2013 due to its low flight traffic, environmentally sensitive location, and ongoing financial deficits.

Per the cabinet statement, management of the airport will be entrusted to Shaurya Aeronautics (Pvt) Ltd. of India and Airports of Regions Management Company of Russia for a period of 30 years.

However, the statement did not disclose the financial terms of the arrangement.

Sri Lanka is currently in talks with China EXIM Bank to restructure the loan for the airport, which is part of a larger $4.2 billion borrowed for various infrastructure projects.

The airport’s construction occurred during the presidency of Mahinda Rajapaksa, who steered Sri Lanka towards closer ties with China, diverging from its traditional ally, India. Notably, the airport is situated in Rajapaksa’s hometown.

In May 2022, Sri Lanka defaulted on its foreign debt following a depletion of foreign exchange reserves, leading to its most severe financial crisis in over seventy years.

To address financial challenges, Sri Lanka has been working on minimizing losses incurred by numerous state-owned enterprises, aided by a $2.9 billion bailout from the International Monetary Fund (IMF).

This assistance has contributed to stabilizing the economy, with projections indicating a return to growth in 2024 after a two-year downturn.