Mattala deal with India: No military operations

The proposed agreement with India on the privatisation of the Mattala Rajapaksa International Airport will include a clause that the airport will not be used for any military purposes, a senior official said. Transport and Civil Aviation Ministry Secretary Nihal Somaweera told the Sunday Times that besides prohibiting the use of the airport for military purposes, the air traffic control tower would also be controlled by Sri Lanka.

The two conditions would be part of the agreement expected to be finalised before December. Sri Lanka included a similar clause in the Concession Agreement for the Hambantota Port with a Chinese company in July. A project committee and a negotiating committee are finalising the agreement to privatise the loss making airport which came into operation in March 2013.

Mr. Somaweera said India had proposed that it be given a 70 percent stake in the joint-venture, but the government was negotiating to have a 40 percent share in the proposed company. “We are expecting our Chief Valuer’s report within a week. We have also asked India for its proposals spelling out details of its operations at the airport to begin the final rounds of the negotiations,” Mr Somaweera said..

The Indian Government’s valuation has been placed at US $293 million and it has offered US$ 205 million, which is equalvent of 70 percent of the value. India has proposed that the joint venture be initially for a 40-year period and could be extended on consensus reached thereafter. An existing staff of 500 will be absorbed to the proposed joint venture.

At present, the airport is suffering losses with an average income of only Rs. six million a month while a loan of US$ 190 million is being paid back to China’s Exim bank. Of this, only US$ 25 million has been paid back.