Sri Lanka to go ahead with Russian firm to operate Mattala airport despite US advice

Sri Lanka will hand over its Chinese-built airport operations to a consortium with Indian and Russian firms, despite the United States has informed about a US sanction on the key stakeholder of Moscow firm, the island’s Aviation Minister said.

A joint venture between Shaurya Aeronautics Pvt Ltd of India and Airports of Regions Management Company of Russia has won the contract to manage Sri Lanka’s Mattala Rajapaksa International Airport for 30 years.

However, officials from the United States have approached Sri Lankan government to inform that the key stakeholder of Russia’s Airports of Regions Management Company is sanctioned by the US treasury in 2018 for suspected meddling in the 2016 U.S. elections,.

“That is not true and correct. We have checked that. It is only a rumour,” Aviation Minister Nimal Siripala de Silva told reporters at a media briefing in Colombo.

“I asked them to give me evidence. Nobody was able to furnish evidence.”

De Silva later told EconomyNext that a top official at the US Embassy also advised him on the Russian firm.

“We are going to hand over the Mattala airport to the Russian and Indian consortium. We had gone through a tedious procedure. I think within a few week time, we will be able to hand over the airport. They are going to take over the airport,” he said.

Officials at the US Embassy were not immediately available for comments on the issue.

The airport, built at a cost of $209 million, was once dubbed the “world’s emptiest airport” because of a lack of flights. The Minister said it incurs a loss of 3 billion rupees (US$10 million) annually.

The airport is strategically located close to the Hambantota port on the southern coast of Sri Lanka where China operates a port on a 99-year lease and also Sinopec is building a US$5 billion refinery.

It has been used sparingly when flights are unable to land in the country’s main airport at Katunayaka, 30 km north to Colombo.

Airports of the Regions, the Russian firm in the joint consortium, is a large airport holding in Russia.

Until 2021, the strategic investor of the company was the Renova Group of Companies, owned by Viktor Felixovich Vekselberg, a Ukrainian born Russian who was sanctioned by the US treasury in 2018 for suspected meddling in the 2016 U.S. elections.

In 2021, however, Vekselberg transferred control over the management company “Airports of the Regions” to a former top manager of Renova, according to media reports.

Sri Lanka used Mattala airport to attract more Russian and Ukrainian tourists soon after the Covid-19 lock down.

Under the previous government, this airport was offered to India with an aim to boost Indian cultural tourists into Sri Lanka. However, the discussion with India to operate the airport did not succeed.