The government today signed a 25 year lease agreement with the GMR-Malaysia Airport Holdings consortium to develop and manage Male’ International Airport, hours after parliament voted in favour of a bill requiring parliamentary approval of lease transactions with overseas parties.
Chairman of the Privatisation Committee, Mahmoud Razee, claimed parliament’s decision today would not impact the signing “as it yet to be ratified by the president.”
The signing ceremony was scheduled for yesterday but was derailed at the eleventh hour after reported disagreements between board members of the Maldives Airport Company Limited (MACL), the organisation which currently manages the airport.
Minivan News understands the four MACL board positions were reshuffled by the government last night in an effort to proceed with the signing today, although this has yet to be officially confirmed – new chairman Ibrahim Saleem, also Chairman of the Maldives Tourism Development Corporation (MTDC), signed the contract today in place of former chairman Ibrahim Nooradeen.
An official of the President’s Office observed to Minivan News that as the MACL is a public company with 100 percent of its shares owned by the government, “it is the duty of the board to act in the interests of the major shareholder.”
Minivan News is currently seeking comment from the board members.
Under the new agreement, the consortium will establish a new local company to manage the airport which will be operated by Malaysia Airlines Holdings. The Maldives National Defence Force (MNDF) will remain in charge of security, and immigration will remain under government control. A briefing document obtained by Minivan News also indicates that the agreement comes with a clause that no staff can be made redundant for two years unless for “disciplinary or performance related reasons.”
The deal has proved controversial with four opposition parties signing a statement on Saturday evening condemning the decision on nationalistic grounds, arguing that handing management of the airport to a foreign company compromised the sovereignty of the Maldives.
Deputy Leader of the main opposition Dhivehi Rayyithunge Party (DRP), Ibrahim Shareef, said last week that the DRP would not honour “shady deals of this type” if it came to power in the next election, unless they were approved by parliament, while today another of the party’s deputy leaders, Umar Naseer, said the deal was “ridiculous” and would result in the dismissal of half the airport’s 3000 staff.
Speaking briefly to the media following the signing, Managing Director of GMR Infrastructure Sri Pathi hinted acknowledgement of the controversy, stating that “airports always belong to the people – never to us.”
“Please don’t think we came here to take over the airport,” he said. “We perhaps become the trustees – but emotionally in terms of ownership it belongs to the people. We are of course here to invest our money and make a business deal on the best terms possible – but the airport still belongs to the people. We make a commitment that we will operate the airport to the best international standards that we can, and prove to you that the trust you place in us will never be betrayed.”
Managing Director of Malaysia Airports Holdings, Basheer Ahmed, noted that the majority Malaysian-government owned company managed 39 airports in Malaysia and several overseas, including airports in Hyderbad and Delhi.
“Every country needs an excellent airport because it is the visitor’s first impression,” he said.
The briefing document obtained by Minivan News contains forecasts of the government’s expected earnings (reportedly provided by GMR) from the airport over the lifespan of the contract. It reveals that a majority of the predicted revenue, a major factor in calculating the NPV (net present value) used to determine the successful bid, derives from the 27 percent fuel revenue share once the airport is completed in 2014:
- 2015-2020: 12.8m gross + 74.25m fuel = US$87.05m per year
- 2020-2025- 17.02m gross + 90.99m fuel = US$108.01m per year
- 2025-2035 – 20.43 gross + 108.27m fuel = US$128.7 m per year
The document contrasted this with the dividends paid to the government by MACL over the last three years, noting that the majority of the dividends paid in 2008-2009 were achieved “by taking a loan.”
- 2007 – 2.3 million
- 2008 – 13.3 million
- 2009 – 5.05 million
On the suggestion that MACL should be allowed to raise finance and invest in the upgrade itself, a predicted US$300-400 million, the document noted that MACL “already has debts of Rf 600 million (US$46.69 million)” and would be unable to obtain further leverage “without a sovereign guarantee – simply not allowed due to the IMF measures.”
Meanwhile, daily newspaper Haveeru featured an interview with the Turkish-French consortium TAV-ADPM, who have reportedly expressed dissatisfaction of the bid evaluation process “and urged for a re-evaluation of the bids.”
“The newspapers started reporting that GMR won the bid even though we were not told the party who won the bid. We faced many problems, since the two companies in our consortium are also listed in stock exchange,” Haveerru reported head of the consortium, Gusiloo Betkin, as saying. “It cannot be said that a certain party won the bid without signing the concession agreement.”
Betkin expressed disbelief to Haveeru that the GMR-MAH bid could offer the government 27 percent of fuel trade “without facing any loss. We are a party that provides services to 170 million passengers annually in 39 airports. We also have experience in fuel trade,” Betkin told the newspaper.
TAV-ADPM had offered 16.5 percent of fuel trade to the government, he noted, the highest deemed feasible, and that at 27 percent, flight arrivals to the Maldives would be affected by rising fuel prices.
“The main thing is the fuel. If the fuel prices are high, no one will take in fuel from there – Maldives will lose that income. The airlines will also focus to other destinations,” Betkin told Haveeru.
The government’s Net Present Value calculations:
- TAV-ADPM
Upfront fee: US$7m
Variable concession fees share – non fuel – 2011-2014: 31%
Variable concession fees – fuel – 2011-2014: 16.5%
Variable concession fees share – non fuel – 2015-2025: 29.5%
Variable concession fees – fuel – 2015-2025: 16.5%
NPV: 454.04
- GMR-MAH
Upfront fee: US$78m
Variable concession fees share – non fuel – 2011-2014: 1%
Variable concession fees – fuel – 2011-2014: 15%
Variable concession fees share – non fuel – 2015-2025: 10%
Variable concession fees – fuel – 2015-2025: 27%
NPV: 495.18
- Unique-GVK
Upfront fee: US$27m
Variable concession fees share – non fuel – 2011-2014: 27%
Variable concession fees – fuel – 2011-2014: 9%
Variable concession fees share – non fuel – 2015-2025: 9%
Variable concession fees – fuel – 2015-2025: 9%
NPV: 266.94
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this government is showing signs of autocracy worst than that shown by maumoon. i hope opposition win this battle and anni is brought down to level ground coz he seems to be forgetting what masses can do...
Deal is a deal. The packages includes a Duty Free that will be Rent Free for Le Cute partners...So cute huh.
Today we got news IAS Agent that Maldivian will increase fares from 15Jul. We the poor people will suffer now. I will shift to sea transport now. Its becoming too bloody expensive to fly now.
I was against the opposition parties (DRP & the lot) before reading this article. But after reading this I hope the opposition wins their battle. I dont think the government has been fair in this deal. How authentic is this committee when they reshuffle their governing board members overnight before the decision making meeting. And these Malaysians are the guys who once bank rupted our only internation airline we had 'The AirMaldive'. Does anyone in the government have brains while making decisions. Every privatisation deal in the country are been on sale for loafers these days. Anni leave Maldives and go live with conservatives in UK.
please people think for a while " that airport has been there for almost past 30 years" there were projects like kasauti series.. but look at what we got there? it looks more like a haruge meaning a boatyard, how much money was spent there only god knows!! each year they break the tiles and put some new tiles to the floor.. it's kinda difficult for me as a maldivian to trust these so called boards, so it's the best way to develop multi million dollar airport ..
HANG THEM
hmmm whats next on for sale????..orchid maa isthiufaa
*FAINTS*
Whats the article trying to prove with all the NPV values? Airport privatization maybe a good thing but the contentious issue here is that it was carried out in the wrong manner and for wrong reasons. From the way this was done by the Government I can even bet the last drop of water in my left ball that there was something not quite right about this deal.
The airport is a mess, even Colombo is a thousand times better facilities. Opposition to the privatising is from vested interests and not opposition parties.
This is a step in the right direction which will nothing but help further enhancing reputation of Maldives and immensely help tourism grow further providing the tourists a world class airport when they step out of their aeroplanes. No doubt, the new airport is for the people of Maldives, no one else. Cheers and goodluck to all.
I fully support the idea of privatization of our airport which is long needed. Being one of best tourist destination, our aiport looks like godown or a pigeon hole. Therefore it is very much in need of a new terminal.
Question arrises form how this process taken place, within an hour a new board was appointed for the airport company and within next 30 mins the with the new BD there was this infamouse signing ceremony. This is leading to so many un answered questions about the legitimacy of the whole process. The main 3 points immediately came to my mind was the whole process was looked after by one minister with 3 hats on, Mahmood Raazee.
1. Minister in charge of the privatization commitee.
2. Minister in charge of the Airport company's regulatory body- Civila Aviation Ministry.
3. Minister in charge of regualtory body of the company- Economic Ministry
I am very much sure there is a lot more things behind which we people will know one day but probably will be too late.
As a kid in Montesoori I am one of the thousand kids who took part in the airport construction.
The fact of the matter is that this is a choice between the old maldives- one that is ruled by the Gasims and Yamins - and a new maldives for the 21st century with a brand new airport and facilities that the youth of this country can be proud of.
The past government's excessive spending on luxury yachts and grand palaces - combined with the culture of cronyism and corruption in which they operated - meant that our vital infrastructure is broken and we don't have the money to fix it.
Private partnerships in airports are done ALL around the world - even by countries that have money. If not why would Saudi Arabia announce Medina airport for public private partnership.
This is the future of the Maldives - be brave and be bold and good things will come
I believe the words of Bob Dylan were meant for the opposition:
...And don't criticize
What you can't understand
Your sons and your daughters
Are beyond your command
Your old road is rapidly agin'.
Please get out of the new one
If you can't lend your hand
For the times they are a-changin'
Democracy, Rule of Law, Best Practices and Corporate Governance do not go along with MDP. P.Nasheed has become such a bigot that he doesnt care or listen to what others say. 28th of June in many ways has become a historical day for us in the Maldives, one thing that the media may not have given enough attention is the courage and essence shown by the Chairman of MACL Board MR. Noorahdeen. He rejected to sign the documents because as a chairman for the BD he has a responsibility to analyze the offers (bids) which he was denied and being a man of principle Nasheed was unable take him in to his circles of YES PEOPLE. The answer to Noorahdhen rejection was no surprise as you all would expect from an autocratic bigot, throw out and paint the rest all yellow.Yes that is exactly what P.Nasheed has been doing since he embraced Presidency.
Today we salute and honor the courageous trio of MACL board Mr.Noorahdheen, I.Siraj and Ameen for their courage to stand for the will of maldivian people.
this smells fishy. I'd give half the money I own to know why Noordeen resigned...
The government hasn't been functioning well either. Y don't u privatize that as well? The govt is showing the mismanagement in government-owned companies as excuses to auction the nation's assets. The bid winner is known beforehand.
Nasheed always talked about transparency and democracy, but when it comes to practicing it he has desperately failed.
Once again, the issue here is the PROCESS. If there is no transparency and accountability in the process, there will be room for assumptions to be made, and leeway for opposition to manipulate facts. True, there seems to be a strong lobby to derail the government in various ways by some elements, but the government itself is making this so much easier by all the cloak and dagger activity. The people are who matter, not politicians who may distort the truth. If the government works on the basis of a people-focused public relations platform, with less paranoia, more openness and inclusiveness, the majority of the people will always give them their blessing to go ahead with development projects. Untrue rhetoric by opposition will be more likely to be thwarted if the people trust the government. Then the pressure will be on parliamentarians also to fall in line with the people's views, which would be with the government instead of against it.
In this particular case, the government has to keep in mind the precedent it is setting for large scale FDI. The credibility of the process will no doubt influence future investment flows into the country. Yes, the IFC was involved, but that does not by itself justify a lack of transparency in the awarding process.
By lack of transparency in the awarding process, I mean clear guidelines and evaluation criteria.
Actual problem here is that Anni is the President and he is trying to bring an immediate impact. Maumoons clans just can’t take it anymore. What to do ..30 years of brain washing. Maumoons clan can easily win in politics. Best thing for Anni to do is better go and leave us to the mercy of Allah Al mighty. Give the Maumoons clan their Raskan; which will go with a little Bangali touch. We Maldivians don’t deserve a better place. We can tolerate discrimination already facing by 100s of Maldivians in resorts and in business managed by 1000s of Indians and other foreigners. We have tolerated 30 years. Let us be slaves to Maumoons clan plsssssssssssssssss Anni can’t take this anymore … u better go. There is no God But Allah , and Prophet Mohamed ( PBUH) is the last of the prophet and Maumoons clan are our only leader and no one else is .
Actual problem here is that Anni is the President and he is trying to bring an immediate impact. Kaminige clan just can’t take it anymore. What to do ..30 years of brain washing. Kamini ge clan can easily win in politics. Best thing for Anni to do is better go and leave us to the mercy of Allah Al mighty. Give the Kaminige clan their Raskan; which will go with a little Bangali touch. We Maldivians don’t deserve a better place. We can tolerate discrimination already facing by 100s of Maldivians in resorts and in business managed by 1000s of Indians and other foreigners. We have tolerated 30 years. Let us be slaves to Kamini ge Klan plsssssssssssssssss Anni can’t take this anymore … u better go. There is no God But Allah , and Prophet Mohamed ( PBUH) is the last of the prophet and Maumoon s Kamige Klan are our only leader and no one else is .
I heard that, most of the airports employees are against the GMR, taking over the Male International Airport..Lets highlight some of those employees...They are: the department heads..who were appointed recently..they get close to 50,000 per month....Second..the section heads..they get more then 33,000 per month...Third,, the managers...they get close to 25,000 per month......so y wud they want to the GMR to come there....All of the guys that i hve mentioned are useless figures...they all fear loosing their jobs...loosing the huge salary....to be honest....chao..Moosa Solih,Chok Hassan, Hondey Amir, Badey Shafeeg,,and al the unqualified managers..and the big hypocrite..Mohamed Ibrahim.....
am very happy i heard The government signed a 25 year lease agreement with the GMR-Malaysia Airport Holdings consortium to develop and manage Male’ International Airport,
superb all the best 4 GMR