Sri Lanka leases white elephant airport built with Chinese loans

Sri Lanka said Friday it had leased a white elephant international airport built with Chinese loans to a foreign joint venture, as the island nation's bankrupt government seeks to offload loss-making assets.

The small airport near a wildlife sanctuary on the southern coast opened in 2013 but was immediately plagued by problems, and has been a running sore on state coffers since.

Government spokesman Bandula Gunawardana told reporters that cabinet had awarded a 30-year lease to a joint venture between India's Shaurya Aeronautics and Russia's Airports of Regions Management Company.


He did not give further financial details, but said only four other companies had shown an interest in managing the isolated airport, which currently has no scheduled flights.

The airport is named after former president Mahinda Rajapaksa, who borrowed heavily from China for infrastructure projects that quickly became commercial failures.

Since receiving an International Monetary Fund bailout last year, Sri Lanka has sought to privatise a host of loss-making state-owned enterprises.

The Mattala airport is in the middle of a migratory route for birds, with several aircraft forced to ground after striking airborne fowl.

Sri Lanka's military were once forced to deploy hundreds of troops to clear deer, wild buffalo and elephants off the airport's runway so it could continue operations.

The first foreign airline to operate out of the facility was Air Arabia in 2013 but they pulled out after six weeks of scheduled services.

Flydubai quit in June 2018 without giving a reason, but officials said poor passenger traffic may have spurred the budget carrier to leave.

National carrier Sri Lankan Airlines stopped flying to Mattala in 2015 soon after Rajapaksa was defeated in the that year's presidential election.

The company later said it saved $18 million annually by not flying to the isolated airport.

Debts to China are partly blamed for an unprecedented financial crisis which prompted Sri Lanka to default on its $46 billion foreign debt in 2023.

In 2017, unable to repay a huge Chinese loan, Sri Lanka allowed China Merchants Port Holdings to take over a nearby port at Hambantota.

The deal, which gave the Chinese company a 99-year lease, raised fears about Beijing's use of "debt traps" in exerting its influence abroad.