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Govt. to absorb huge portion of SriLankan’s outstanding debt

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The deadline for the submission for Request for Proposals (RFP) for divesting of SriLankan Airlines has been extended by 45 days, Minister of Ports, Shipping and Aviation Nimal Siripala de Silva said at a special press conference yesterday.

He said that the International Finance Corporation (IFC) which is advising and handling the divestment of SriLankan Airlines has forwarded a request to the restricting unit of the airline to extend the period. the Minister said.

“Due to issues faced by the airline it’s difficult to get good offers at a time and this is why we decided to extend the offer.”

He said that due to the current delays experienced due to lack of aircraft and other issues Srilankan Airlines is facing issues and if this negative trend continues the airline would have to be shut down. If this happens the jobs of 6,000 workers will be at stake and it’s to avoid this and ensure’ job security’ of these employees that the government is trying to divest the airline and find a suitable international partner who could reinvest and turnaround the airline.”

The Minister said that President Ranil Wickremesinghe as the Minister of Finance too has understood this issue and also requested to take several meaningful steps to safeguard the welfare of the staff. The President in a bid to make the airline more attractive to an investor has forwarded a proposal to the Cabinet (which was approved) to absorb a huge portion of the SriLankans’ outstanding debt. This would be around USD 510 million.”

This includes intentional bonds amounting to around USD 175 million and money due to the two state banks, Bank of Ceylon and Peoples Bank. The Minister also said the government will also absorb a huge amount of unpaid bills by the Srilankan Airlines due to the Ceylon Petroleum Corporation for purchase of aviation fuel.

He disclosed that due to these initiatives made by the President the total debt of the airline which is around USD 1.2 billion will come down to around USD 500 million. The Minister also said that to upkeep the airline and address some of the urgent financial issues the government has agreed tomaintainthe servicing of the national carrier for another six months.

“Hence we have now decided to call for another 45 days before choosing an investor for the national carrier and we have made the airline more attractive to the new investor.”

De Silva also said that when the airline is divested they hope to get around USD 500 million and this would be ploughed back to State banks and used to fulfill other financial obligations due by the airline thus not being a burden to the taxpayers’ money.

The post Govt. to absorb huge portion of SriLankan’s outstanding debt appeared first on DailyNews.

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