Sri Lanka to hand over management of chinese-built airport to indian and russian companies.

In a bid to mitigate losses incurred by its state enterprises, Sri Lanka has announced plans to transfer the management of the Mattala Rajapaksa International Airport (MRIA) to two foreign entities. The $209 million airport, constructed with funding from China EXIM Bank, has faced challenges since its inauguration in 2013, including limited flight operations, environmental concerns, and financial deficits.

According to a cabinet statement released on Friday, the management of MRIA will be entrusted to Shaurya Aeronautics (Pvt) Ltd. of India and Airports of Regions Management Company of Russia for a period of 30 years. Although the statement did not disclose the financial terms of the agreement, this move underscores Sri Lanka’s efforts to revamp its state-owned enterprises and alleviate financial burdens.

Sri Lanka is currently engaged in negotiations with China EXIM Bank to restructure the loan associated with the airport, which is part of a larger debt portfolio amounting to $4.2 billion for various infrastructure projects. The construction of MRIA took place under the administration of former president Mahinda Rajapaksa, who fostered closer ties with China, diverging from the country’s traditional alliance with neighboring India. Notably, the airport is situated in Rajapaksa’s hometown.

The decision to hand over the airport’s management comes amid Sri Lanka’s economic challenges, including a default on foreign debt in May 2022 and a subsequent financial crisis exacerbated by dwindling foreign exchange reserves. To address these issues, Sri Lanka recently secured a $2.9 billion bailout from the International Monetary Fund (IMF), aimed at stabilizing the economy and facilitating a return to growth in 2024 after a prolonged period of economic strain.