India agrees to Government Valuer’s estimate of Mattala

Wednesday, 18 July 2018 00:00 -     - {{hitsCtrl.values.hits}}


  • New agreed value of Mattala is $ 325 m, scraps Indian valuation of $ 293 m
  • Shareholding remains at 70:30 with India holding lion’s share

 By Chathuri Dissanayake

The Aviation Authority of India has agreed to the Sri Lankan Chief Valuer’s estimate for Mattala Rajapaksa Airport during the last round of negotiations, the Deputy Minister of Transport and Civil Aviation said yesterday.

However the Indian counterpart is yet to come up with a comprehensive business plan for the Joint Venture proposed by them, Deputy Minister Asoka Abeysinghe revealed.

The initial proposal given by India valued the Mattala Airport at $ 293 million, proposing to invest on 70% of the shares valued at $205 million. However Sri Lanka was not happy with the valuation and commissioned the Government Valuer to estimate its worth. The Chief Valuer’s estimate, $ 325 million, was accepted during last round of talks, when AAI officials visited Sri Lanka two weeks ago, the Minister said.

“This was where the discussion was stuck. It is good that they have accepted the value,” he said.

However, Sri Lanka’s concern over a solid business plan to make the JV viable still remains. The AAI has not presented a detailed plan following Sri Lanka’s request at an earlier stage in negotiations. Until such plan is agreed upon, the Government will not be able to enter into any agreement with India. The share ownership ratio will remain at 70:30 as proposed by India despite the Sri Lankan Government expressing desire to increase its portion to at least 40%.

Dubbed as the loneliest airport in the world, Mattala currently has no scheduled flights as the only airline flying to the destination cancelled its flights a month ago. The Government is hoping the JV with India will revive the ill-planned airport, Abesinghe said. The Minister yesterday revealed that no proper feasibility study had been carried out before it was built.

The Government has to pay Rs. 1.7 billion as repayment of loan taken to build Mattala Airport, the Minister said. According to him, three such instalments have been paid through earnings from Katunayake Bandaranaike International Airport.

“After the five-year grace period, now we have to start paying back the loan, but there aren’t enough earnings from the airport to pay back. While earnings from the airport are only Rs. 6.5 million, expenses are Rs. 2.9 billion,” he said.

The total investment of the troubled airport is $ 252 million inclusive of a $ 39.6 million price escalation claimed by the contractor and another $ 4 million invested by AASL. The average operational cost, including loan interest, without exchange loss per year is $ 20 million.