The government is reportedly in grave difficulties over the agreement SriLankan Airlines has signed with Airbus ASA to produce and import four A 350-900 aircraft.
That came to light after a proposal was tabled to the cabinet recently to cancel the agreement.
Government sources say state enterprise development minister Kabir Hashim submitted the proposal, seeking approval for a cancellation or any other measure with regard to the agreement.
However, the government is unable to take a decision due to the manner the agreement was signed during the Rajapaksa regime, and also Airbus ASA’s refusal to cancel the agreement.
It was signed on 28.06.2013, and the first to aircraft will be delivered in the second quarter of 2020, and the fourth in the final quarter of 2021.
The advance payments began to be made in 2013 itself, and the final payment is due in December 2018. So far, the SriLankan has paid 19,214,638.45 dollars to Airbus ASA, out of a total payment of 222,356,600.85 dollars.
However, with the cabinet decision taken on 24 June 2015 to restructure the national carrier, its fleet will be reduced in number, with suggestions to delay, renegotiate or cancel the A 350-900 purchases.
Discussions began in November last year to cancel the agreement, but Airbus ASA has refused to cancel it altogether. Also, the advance payments were suspended from November 2016, with 679,463.61 dollars outstanding. Airbus ASA has sent reminders about the advance payments, and it is likely to seek court redress over a violation of the agreement.
According to the attorney general’s recommendations, the government has to take a policy decision to cancel the deal. Airbus ASA has refused to discuss the matter until a presidential commission and the CID complete their investigations into the agreement. The total expense to be incurred in the event of a cancellation is yet to be estimated. Any measure to be taken needs careful consideration, and should be carried out in a transparent manner, as underhand deals are possible, the sources say.