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UNCLAS SECTION 01 OF 02 COLOMBO 001125 
 
SENSITIVE 
 
SIPDIS 
 
DEPARTMENT FOR SCA/INSB 
 
E.O. 12958: N/A 
TAGS: CE ECON ETRD EINV EAIR ELTN CH
SUBJECT: HAMBANTOTA INTERNATIONAL AIRPORT: INCREASING 
CHINESE INVOLVEMENT IN SRI LANKAN INFRASTRUCTURE 
 
REF: COLOMBO 01007 
 
COLOMBO 00001125  001.3 OF 002 
 
 
¶1. (SBU)  Summary:  The Government of China is constructing 
an international airport in conjunction with the large 
Hambantota port.  Hambantota is located in the rural South of 
Sri Lanka, which also happens to be President Rajapaksa,s 
home region and political base.  China Harbor Ltd. is engaged 
in final negotiations with the Government of Sri Lanka for 
the contract to construct Hambantota International Airport. 
Negotiations should be completed by mid-December.  Full scale 
construction may begin in early January 2010 with the project 
completed sometime in 2011.  The airport project will be 
wholly funded with a Chinese EXIM bank loan worth $190 
million USD with concessional interest rates and a 40 year 
repayment schedule.  Over the next 5-10 years, Hambantota 
airport is unlikely to turn a profit.  Incoming passenger 
flights will be on a charter basis only.  The GSL and AASL 
would like to develop the airport into a regional air cargo 
hub and the airport has been designated as a tax free zone 
for this purpose.  Although the economic viability of the 
airport is questionable, the project will increase Chinese 
influence, provide fat construction contracts for Chinese 
companies, and augment Chinese control of Sri Lankan 
infrastructure.  End Summary. 
 
CHINA FINANCES AN INTERNATIONAL AIRPORT IN RURAL SRI LANKA 
 
¶2. (SBU)  Hambantota is a rural area in the south that is 4-5 
hours drive away from Colombo.  The Government of Sri Lanka 
hopes that the Hambantota port (also built with Chinese 
assistance) and planned manufacturing zones will spark the 
development of Hambantota as a regional transportation hub. 
Hambantota is also President Rajapaksa,s home region and his 
political base, which would certainly benefit from the 
increased employment opportunities afforded by the Hambantota 
projects. 
 
¶3. (SBU)  Sri Lanka has broken ground for the Hambantota 
International Airport, the country's second international 
airport.  Preliminary designs for the airport have been 
completed and the Ministry of Ports and Aviation (MoPA) and 
Airport and Aviation Services (Sri Lanka) Limited (AASL), in 
theory, are looking for interested contractors to submit 
detailed design plans and construction proposals.  In 
practice, China Harbor Limited has the inside track for 
construction of the airport.  The company is in final 
negotiations with the Government of Sri Lanka and a contract 
to begin construction of the airport should be completed in 
mid-December.  The MoPA hopes to see construction begin in 
early January 2010 with the project completed sometime in 
¶2011.  This is an ambitious target date which may not be met 
if airport construction slows for any reason. 
 
¶4. (SBU)  The airport project will be wholly funded with a US 
$190 Million Chinese EXIM bank loan with concessional 
interest rates and a 40 year repayment schedule.  Once 
completed, the airport will be managed by AASL; however, AASL 
will consider potential joint ventures with domestic or 
international companies.  Chinese companies have not yet 
expressed interest in airport management of Hambantota. 
Initially, one runway, capable of handling take-offs/landings 
from Airbus A380s, will be constructed along with a passenger 
and cargo terminal and requisite support facilities. 
According to MoPA, there is ample space to construct a second 
runway if needed.  850 hectares have been allocated for the 
new airport, with additional 1,200 hectares held in reserve 
for future airport expansion. 
 
ECONOMIC VIABILITY IS IN QUESTION 
 
¶5. (SBU)  Over the next 5-10 years, MoPA and AASL do not 
 
COLOMBO 00001125  002.3 OF 002 
 
 
anticipate the Hambantota airport turning a profit. 
Initially, incoming passenger flights will be on a charter 
basis only.  The GSL and AASL would like to develop the 
airport into a regional air cargo hub and Hambantota has been 
designated as a tax free zone for this purpose.  The MoPA is 
in deep negotiations with at least two international cargo 
handlers to base their regional hubs out of Hambantota. To 
date, Chinese airlines and cargo carriers have not expressed 
significant interest in making Hambantota a regional hub or 
establishing passenger routes to/from Hambantota although 
MoPA is optimistic that this will eventually occur. The MoPA 
is also looking at ways to integrate the airport with the 
Port of Hambantota, and feasibility plans are being developed 
to utilize the airport for the transport of bulk cargo 
brought by ship to Hambantota. 
 
GSL JUSTIFICATION FOR A SECOND AIRPORT 
 
¶6. (SBU)  According to the MoPA and AASL, construction of the 
Hambantota airport is necessary given the need to have an 
alternate landing facility for international flights if 
diverted from Bandaranaike International Airport north of 
Colombo.  Current plans call for diverting international 
flights to southern India in the event of an emergency. 
Note. It is not clear why the GSL did not expand a regional 
airport near a population center for this purpose.  End Note. 
 The GSL also envisions utilizing the Hambantota airport as a 
base of operations for aviation and maritime rescue 
operations as well as conducting ship to shore transfers of 
crews anchored near the port.  The GSL plans to integrate the 
airport with the Hambantota master plan with the extension of 
the southern highway and railway. 
 
¶7. (SBU)  Comment:  Plans to build the Hambantota airport are 
ambitious and the timeline for its completion very 
optimistic.  With Chinese assistance though, this is a 
realistic goal for the GSL and the MoPA.  The Chinese have a 
strangle hold on construction of the airport and have added 
leverage for the project due to Chinese EXIM bank financing. 
While Chinese businesses have not yet expressed interest in 
joint management of the airport or in establishing air links 
to the airport, they will have preference and an inside track 
should they decide to throw their hats into the ring. 
Coupled with Chinese involvement in the Port of Hambantota, 
infrastructure development projects within greater 
Hambantota, and involvement in construction projects within 
Hambantota proper, Chinese interests have a lock on influence 
with the GSL for the foreseeable future.  Chinese efforts in 
Hambantota are in line with robust aid and development 
assistance in other areas of Sri Lanka.  It remains to be 
seen whether Chinese involvement ends when a project does or 
whether Chinese businesses will then pick up the slack and 
fill the void.  End Comment. 
FOWLER