The Hon. Anura Karunathilaka

¶ 01 Next year marks the end of Phase I of the Western Terminal. By then, millions more TEUs will be added to capacity. How do we build this as a logistics hub? We know South Asian economies, especially India, are rapidly developing. As they grow, do we try to compete head-to-head or position ourselves as stakeholders, channeling that growth into our port development? Our strategic decision should be to integrate into regional growth. We believe rather than aiming only at a fully competitive model, moving to a partner–stakeholder model will help us capture a share of regional throughput growth for our ports. Under ADB and World Bank assistance, we are already discussing a comprehensive master plan for all ports including the North Port. A feasibility study has been allocated Rs. 300 million. In parallel, we are improving operational efficiency at the Port of Colombo and enhancing capacity to transform it into a higher-throughput, more efficient port.

¶ 02 There has long been debate about introducing a Port Community System (PCS). It has even received several Cabinet approvals but was not implemented. We have now obtained a fresh Cabinet approval to introduce a PCS at Colombo Port and are expediting the necessary steps.

¶ 03 On the Kerawalapitiya dry port, ADB has conducted a study. We must move quickly. During Hon. Bimal Rathnayake’s tenure, the legal status of the land—previously reserved for gas—was clarified. Implementation has still been delayed. It is to be operated under Sri Lanka Customs. We have discussed with Customs and intend to proceed.

¶ 04 Regarding Kankesanthurai (KKS) Port: for years we discussed developing KKS as a passenger and logistics port. Some issues required resolution in the negotiations. We have submitted alternative proposals on the key elements of the understanding and handed them to India. We expect to resume talks in early January. India has indicated preliminary agreement to consider a joint venture operation with Sri Lanka rather than earlier models. We expect to commence activities in 2026. Previously, India proposed loan financing; now they have indicated readiness to provide grant assistance of US$ 63.5 million for KKS Port development.

¶ 05 We are also focusing on developing Galle Port centered on tourism. Several investors have submitted proposals; discussions are ongoing and we hope to call for expressions of interest soon.

¶ 06 Madam Deputy Speaker, on airports: Airport and Aviation Services (Sri Lanka) Ltd. increased revenue by 25% year-on-year, and operating profit by 58%. Post-tax profit in 2025 is up 36% over 2024. Even Jaffna International Airport increased revenue from Rs. 76 million in 2024 to Rs. 92 million in the first nine months of 2025 and has turned a net profit.

¶ 07 On the second phase of BIA (Katunayake): discussions dragged on for years with delays. With JICA’s facilitation, 11 projects under JICA that had stalled were allowed to restart after this Government took office. The BIA Phase II project—within that portfolio—has completed technical bid evaluation. Further discussions are underway; we expect to open price bids in January and aim to award the contract around June–July 2026 and commence construction.

¶ 08 Because the second terminal was not built on time, BIA is now congested. As a temporary measure, with private sector support we erected a marquee with 14 temporary check-in counters, enabling 18–20 additional aircraft movements per day and more airline services. The Government of Japan also helped secure four e-gates via IMO; these have been installed at departures and will be opened on 1 December, which will further improve efficiency.

¶ 09 On Mattala Airport: it has been losing Rs. 2–3 billion annually. Designed for about one million passengers per year, it currently operates at under 10% of capacity. Since opening in 2013 it has continuously made losses: Rs. 3.409 billion in 2024 and Rs. 3.927 billion by October 2025. Cumulatively since inception, losses exceed Rs. 66 billion. We cannot continue to carry this burden. While BIA and Jaffna generate profits, our other international airport is loss-making. We must rethink management at Mattala. Since 2023, many expressions of interest for management were received but none reached a successful conclusion. We should not run it merely as an airport; we must call proposals for an aviation school, MRO facilities, etc. We cannot keep funding this solely through taxpayers.

¶ 10 For tourism growth we also need to develop domestic aviation. Funds have already been allocated to develop the Hingurakgoda domestic airport. We will also study during the coming year whether BIA could accommodate a dedicated domestic terminal.

¶ 11 Efficiency matters as much as infrastructure. We must address airport communications and systems.

¶ 12 On SriLankan Airlines: much has been said about losses. Despite SriLankan Catering and Ground Handling being profitable, the airline and cargo arms are loss-making. Losses were Rs. 34 billion in 2024 and Rs. 33 billion in 2025; total debt is around Rs. 188 billion. One root cause dates to the acquisition of six A320-family aircraft initiated in 2017 and concluded in 2018. The then management opted for CFM LEAP engines instead of standard Rolls-Royce for the type. LEAP at that time had just entered the market and suffered design failures, leading to worldwide engine issues and groundings. Many airlines were affected; some even suspended services. As at 31 October 2025, these aircraft had spent 131 months cumulatively on the ground; one aircraft remains out of service. We have paid about US$ 60 million for grounded aircraft with no revenue. Critically, these leases were taken without maintenance agreements defining how heavy maintenance would be handled. Consequently, about US$ 70 million has been paid additionally, and we project a national burden of about US$ 172 million over the next few years. For 2025 alone, total losses related to this are about US$ 29 million, of which US$ 23 million is maintenance-related.

¶ 13 Further, the infamous 2013–2014 Airbus deal: instead of reaching a negotiated settlement—as is typical in global aviation—the order was cancelled outright, resulting in a US$ 115 million penalty. Additionally, two older A330s had to be acquired at above-market prices, costing another US$ 50 million. The cumulative burden to SriLankan from that cancellation approaches US$ 400 million.

¶ 14 Our national carrier and ports are strategic assets. Ordinary citizens—many who have never even seen a widebody aircraft—are ultimately bearing these burdens. As a responsible Government, we must make evidence-based decisions to develop our ports and airports.

¶ 15 I thank the Ministry Secretary, Additional Secretaries, heads of institutions, staff, my Deputy Minister, and especially former Minister Bimal Rathnayake for their support in bringing this budgetary proposal forward.