After a close contest against the opposition United National Party in 2005, the Rajapaksa administration assumed power and established a government that ultimately brought Sri Lanka's economy to its knees.
The explanation is that the despotic leadership was enticed by the enormous Chinese loans on offer at the time for the development of infrastructure, which turned into a successful business for narrow-minded political leaders.
Finally, the nation became enmeshed in enormous loans without having a clear plan in place for debt repayment. Sri Lanka was forced to declare insolvency a year ago due to the strain of a debt trap that had pushed the nation and its citizens into a simmering situation that eventually erupted after declaring insolvency.
There are several Chinese-funded projects that have earned the sobriquet "white elephants" among the masses because they have proven their futility. Two such prominent projects are the Mattala International Airport and the Magampura-Hambantota Port. The port is virtually owned by the Chinese on a ninety-nine-year lease. The two projects are located eighteen kilometres apart from each other. Mattala Airport has earned the nickname the least used airport in the world. It was built during the presidency of Mahinda Rajapaksa.
Both the port and airport, built with huge loans from the Chinese EXIM Bank, stand as stupendous monuments to fiscal extravagance practised by rulers lacking foresight and imagination. The country is currently reeling under deep economic and political chaos.
Mattala Rajapaksa International Airport is a classic example of the shortsighted policies of Sri Lankan leaders and an example of the rapacious economic policies of Beijing.
These projects have left Sri Lanka with massive debts, with little to show for the money spent. This has caused immense strain on the country's economy and has led to social unrest. The situation has forced the government to look for alternate sources of funding for debt repayment.
The National Audit Office (NAO) recently said that the operating cost of the Mattala Rajapaksa International Airport for 2022 was Rs 2.03 billion, which is 26 times higher than its income.
The NAO report added that only 11,577 passengers travelled via Mattala airport last year, even though over 1 million passengers are expected at the Mattala Rajapaksa International Airport annually.
It has been revealed that only 103,324 passengers travelled via MRIA from 2017 to 2022, and the total losses incurred by the MRIA topped Rs 42.81 billion during this period.
The government has spent Rs 55.56 billion for the MRIA construction project, and Rs 19 billion of them are foreign loans.
Mattala Rajapaksa International Airport is a symbol of waste on unviable commercial projects. The Indian media has highlighted the Sri Lanka issue with massive media coverage. That served as an eye-opener for many.
Like Sri Lanka, Pakistan is also the biggest beneficiary of economic assistance from China, and that too has descended into political and economic chaos. Instead of Chinese loans making the two economies more resilient, the client states of Beijing have literally folded up in the wake of the global economic crisis brought on by a pandemic, which ironically has origins in Wuhan, China.
Not only the Mattala Airport and the Magampura Port, but other projects such as the Lotus Tower, the Hambantota Conference Hall, and the Colombo Port City have added to the list of white elephants wanting new investments to rejuvenate them. The Colombo Port City provides an artificial beach, but investments are scarce, though politicians have been optimistic about its viability.
The National Audit Office, in its report on the Mattalal Airport, states thus:
A loan agreement was signed between the Democratic Socialist Republic of Sri Lanka and the People’s Republic of China for the construction of the Mattala International Airport to fulfil the need for the establishment of an alternate international airport.
The value thereof amounted to US$209 million. The construction work on a land area of 2,000 hectares was commenced on November 17, 2009, and the total expenditure incurred amounted to U.S. $243.7 million.
The International Airport was opened for operations on March 18, 2013. The Airports and Aviation Services (Sri Lanka) Company Ltd. is in charge of its operations.
The performance audit was an evaluation of the selection of Mattala for the construction of an alternative international airport and the performance of its operations.
In the selection of a suitable area for the construction of the alternative international airport, the then government identified places such as Palali, Koggala, Hingurakgoda, Kuda Oya, and Weerawila and conducted preliminary studies, followed by the preparation of reports, surveys, and foundation stone laying ceremonies, incurring a sum of Rs. 52,438,788. Despite incurring such expenditure, the construction of the airport had been abandoned due to reasons such as public protests, changes of government, and such other reasons. As such, it was observed that the selection of a suitable site had not been done with long-term vision.
In view of the unemployment of the younger generation and the economic setback of the Southern Province, which resulted in revolts against the government, the then government, while giving priority to the Southern Province, prepared plans in 1994 for the construction of an international port under the Hambantota City Development Project for the creation of economic development.
Accordingly, the Weerawila area had been selected at the initial stage for the construction of the International Airport to carry out development work together with the Hambantota Port. That site was later abandoned due to public protests, and the Mattala area was selected subsequently for the construction of the airport.
In view of the close proximity of the selected site to the National Sanctuary in that area, environmental problems such as the obstruction caused to the runway by the wild animals and the danger to the existence of the wildlife due to the interference in their natural habitats had emerged. Since the opening of the Mattala International Airport, three domestic and three foreign aircraft had commenced operations from the airport, and by the end of 2015, that had been limited to only one aircraft. The arrival of local and foreign passengers to and departure from the Mattala International Airport during the years 2013 and 2014 had been 36,137 and 40,386 respectively, while the number of passengers had dropped to 4,945 by June 2015. The income earned in the years 2013 and 2014 amounted to Rs. 48 million and Rs. 136 million, respectively, and that amounted to Rs. 49 million up to June 2015. Nevertheless, the total costs incurred on employees’ salaries, maintenance of the airport, electricity, and water in the years 2013 and 2014 were Rs. 2,153 million and Rs. 2,865 million, respectively, while the total expenditure incurred up to June 2015 amounted to Rs. 1,323 million.
Along with the political changes in 2015, the flights of domestic and foreign aircraft maintenance incurring losses had been ceased, and the operations of the airport had been limited to one aircraft.
Despite the decrease in income for the year 2015 due to such a situation, the administrative and maintenance costs had to be incurred continuously as the airport had to be kept open day and night.
In view of the paddy storage crisis in Sri Lanka in 2015, the Stores Complex of the Mattala International Airport had been released, without the removal of the valuable equipment, to the Paddy Marketing Board on an agreement for a period of 3 months for the storage of paddy. It was also observed that the company is facing a severe liquidity crisis due to reasons such as the annual income earned being less than the expected targets and being inadequate to meet its operating expenses and the repayment of the loan obtained out of the operating income of the company. The loan obtained from the Government of China should be repaid after the grace period of 5 years, that is, in 15 years from the year 2015, in installments at 2 percent interest. Accordingly, the Treasury paid a sum of Rs. 1,989,815,019 during the grace period as 0.5 percent commitment fees and management fees. Similarly, the first repayment installment that fell due in September 2015, amounting to U.S.$ 8.4 million, had been paid by utilising the short-term dollar deposits of the Airports and Aviation Services (Sri Lanka) Company Ltd.
It was observed that this airport has been constructed according to very high standards and provided with modern equipment at heavy costs, and that it is necessary to increase the volume of aircraft operations in order to make it productive in operations. As the construction of the Alternative International Airport is an investment made for future development, the facilities provide a direct contribution to the improvement of other aviation services, which should be identified as investments. As such, there is a need to give priority to the improvement of public transport, the construction of motorways, and the improvement of infrastructure in the Mattala area, as well as the establishment of industries, hotels, and other essential facilities.
However, as of now, Mattalal Airport remains one of the most underutilised airports in the world, causing a humungous loss to Sri Lanka.
