The Government of India (GOI) has expressed interest in developing the Mattala Rajapaksa International Airport (MRIA).
According to a Cabinet paper submitted by Transport and Civil Aviation Minister Nimal Siripala de Silva, the Indian Government had sent a proposal in May 2017 to “form a joint venture company between GOI or its assigned entity and Government of Sri Lanka (GOSL) or its assigned entity for the operation of MRIA on the basis of sharing of equity at the ratio of 70:30 for 40 years”.
The Indians have also shown interest to “operate, manage, maintain and develop MRIA with and not limited to commercial aviation, aircraft maintenance repair and overhaul, flying school”.
They are willing to invest US$ 205 million as their equity share and GOSL is to share the balance of US$ 88 million totalling to US$ 293 million as per their valuation of assets of MRIA.
The Minister has asked Cabinet to further study the proposal and evaluate it based on the re-valuation of the assets and lease value of the land in Mattala, to appoint a Cabinet Appointed Negotiation Committee (CANC) assisted by a Project Committee to evaluate the proposal and to make recommendations to Cabinet. The Minister has also proposed that they continue to look at other proposals in the meantime.
In December of 2016, 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.
MRIA was started in 2009 through a loan funded by the EXIM Bank of China. The Chinese granted a loan of US$ 190 million to be repaid over 15 years, starting from 2015 for the project which was estimated to cost US$ 209 million at the time. The balance of USD 19 million was footed by the Airport and Aviation Services (SL) Ltd (AASL). The Airport was declared open in March 2013.
Since being opened, MRIA has not fared well and has run up greater losses. In April 2017, Cabinet had to approve an additional USD 39.6 million in payment to the contractor who had claimed for ‘price escalation, cost variation and interest on delayed payments’. This takes the total cost of the project to USD 252 million.
Minister de Silva in his Cabinet paper also explained that the average operating cost including loan interest and excluding exchange loss for per year amounted to USD 20 million. In addition 437 people work at the airport an on average between 2013-2016, the number of aircrafts and passenger movements internationally and domestic respectively were 1500 and 28,000.
On average, the Airport earns a revenue of USD 1.2 million per year but as of 31 December 2016, its accumulated losses amount to USD 112 million.
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