The government has decided to grant a Treasury Guarantee for SriLankan Airlines to get a US$ 175 million loan from the Mashreq Bank. The monies are to be taken on an agreement to pay back in four years.
The Bank of Ceylon has introduced the Mashreq Bank of the United Arab Emirates (UAE). The middlemen in the transaction are MPs Namal Rajapaksa and Sajin Vass Gunawardena.
Sajin Vass Gunawardena had attended a meeting that was held to identify collateral for the loan agreement and the MP had managed to get the Finance Ministry approval to the loan conditions.
A senior official from the Civil Aviation Ministry said the monies from the loan are to utilized to pay the due to the Ceylon Petroleum Corporation (CPC), pay back the short term loans to the banks, for capital investments and for operations at the Wattala Airport.
The official said that the dues from SriLankan Airlines to CPC stood at over Rs.15 billion as at February 29, 2012.
The government had also invested five year Treasury Bonds worth Rs. 14.2 billion (US$ 125 million) as capital infusions to SriLankan Airlines.
The Ministry official said that Civil Aviation Minister Priyankara Jayaratne had presented the Cabinet paper on the 14th of this month to receive approval for the US$ 175 million through a Treasury Guarantee. The Ministry states that the finances of SriLankan Airlines were at low levels due to the high fuel costs last year and the monies spent on repairing the fleet of aircraft.