Sri Lanka will hand over management of its US$209 million Chinese-built airport to two Indian and Russian companies, a cabinet statement said on Friday (Apr 26), as the island nation attempts to reduce losses from its state enterprises.

Mattala Rajapaksa International Airport (MRIA), funded by China Exim Bank, has stoked controversy since its opening in 2013 due to a low number of flights, environmentally sensitive location and persistent financial losses.

The airport’s management will be handed over to Shaurya Aeronautics of India and Airports of Regions Management Company of Russia for 30 years, the cabinet statement said, without mentioning the deal value.

Sri Lanka is negotiating with China Exim Bank to restructure the airport loan, part of US$4.2 billion borrowed for other infrastructure projects.

The airport was built during the tenure of former president Mahinda Rajapaksa who shifted the country closer to China and away from its traditional neighbour India. The airport is located in Rajapaksa’s home town.

Sri Lanka defaulted on its foreign debt in May 2022 after the island nation’s foreign exchange reserves fell to record lows triggering the worst financial crisis in more than seven decades.

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Sri Lanka is working to reduce losses made by dozens of state owned companies after securing a US$2.9 billion bailout from the International Monetary Fund (IMF), which has helped stabilise the economy and move it closer to returning to growth in 2024 after two years. REUTERS