Airports Council International (ACI), the global body representing the world’s airports, has advised its members to exercise caution before making any investment in the Maldives relating to Ibrahim Nasir International Airport (INIA).
In an email obtained by Minivan News dated May 8, ACI alerted its members that the Maldivian government is “in the process of transferring the Male’ airport to a wholly-owned subsidiary of MACL and may explore a sale of equity in this entity to another airport operator.”
“ACI members are advised to conduct due diligence while considering any investment in the Maldives, considering the latest developments, uncertainty of outcome of elections, the legal and financial risks of the current arbitration and the nascent legal framework,” the email states.
The cautionary note emphasises that ACI was “not taking sides with respect to the decisions made by the various parties”, and matter-of-factly outlines the government’s sudden termination of the concession agreement with the GMR-Malaysia Airports (GMR-MAHB) consortium to manage and upgrade Ibrahim Nasir International Airport (INIA).
The government declared the 25 year concession agreement ‘void ab initio’ in November 2012 and gave the foreign investors seven days to hand over the unfinished airport to the government-owned Maldives Airports Company Limited (MACL).
While subsequent arbitration proceedings saw the Singapore Supreme Court endorse the government’s right to expropriate the airport, ACI noted that “this was subject to [the government] offering sufficient compensation pursuant to the concession agreement”.
“However on December 8 MACL/Government of Maldives took over the possession and control of the airport without payment of compensation”, the email stated.
ACI informed its members that the takeover was the subject of arbitration proceedings expected to last 9-12 months, and further noted that as the government had guaranteed bank loans used by the developer, these were also the subject of separate proceedings.
With elections scheduled for September, ACI advised it was possible that “any leadership changes arising out of the elections [could] have a material impact of the future of the Male’ airport and the decision of expropriation.”
MACL and MIAL
On March 14, the government declared in a one-line statement that it was establishing by presidential decree a new 100 percent state-owned company, Male’ International Airport Limited (MIAL).
On March 31, President Dr Mohamed Waheed appointed MIAL’s board of directors, including tourism tycoon and Chairman of Universal Enterprises, Mohamed Umar Manik, as chairman, and Island Aviation Chairman Bandhu Ibrahim Saleem as managing director.
Other directors appointed included Thoriq Ibrahim of G. Noomaraahiya, Ahmed Munavvaru of Gaafu Dhaalu Madaveli Gahaa, Abdulla Yazeed of Dhaftharu, and Ibrahim Iyas of Dhaftharu.
The decision to form MIAL last month led GMR-MAHB’s lender Axis Bank to accuse the government of trying to turn MACL into a shell company, and warning it not to transfer MACL’s assets or function while arbitration was pending.
“Given that Axis Bank’s claim under the direct agreement is against MACL, you will understand that Axis Bank views with the greatest concern any attempt to dissipate the assets of MACL in favour of MIAL or any other third party,” wrote Axis Bank’s CEO Bimal Bhattacharyya in a letter copied to MACL and the Ministry of Finance, dated April 22.
“If MACL ceases to manage and operate Male’ airport, and MIAL instead performs that role, then MACL will lose almost all of MACL’s revenue stream, and become a shell,” writes Bhattacharyya in the letter, obtained by Minivan News.
The letter calls on the government to “confirm or deny” its intentions by April 25, and “undertake not to allow any assignment, transfer or disposition of any of MACL’s rights to manage and or operate Male airport to MIAL or any third party… or allow MIAL or any third party to perform any function of managing or operating Male’ airport which is presently performed by MACL” by April 27.
“Please understand that Axis Bank views any dissipation of MACL’s assets with grave concern, and will take the necessary legal action to prevent such a dissipation”, the bank advised.
MIAL’s appointed CEO Bandhu Saleem confirmed to Minivan News that the government did intend MIAL to manage the airport, but said the process of transferring that responsibility over from MACL had run into “hurdles” relating to its current legal issues.
“The board has been appointed, but I have not yet taken on the role,” he said, noting that the new company was waiting on government clearances and had yet to be officially created.
“Until the arbitration is complete, I think it will be very difficult to start a new company,” he added.
Axis Bank loans and compensation claim
A legal submission detailing the Axis Bank dispute, also obtained by Minivan News, notes MACL’s failure to notify Axis Bank of its intention to terminate the concession agreement within 60 days, as required in the bank’s direct agreement.
An included copy of the November 24, 2010 agreement, in which the Ministry of Finance guarantees the loans to GMR-MAHB, is signed and stamped by both then-MACL Chairman Ibrahim Saleem and Finance Minister Ali Hashim on behalf of the government.
The document shows that Axis Bank is seeking the repayment of US$160 million by the government of Maldives due to MACL’s breaching its obligations under the agreement.
At the same time, the governor of the Maldives’ central banking authority recently warned parliament that the Maldives’ gross state reserves had fallen to little more than US$300 million, after the government was compelled to repay a series of US$50 million loans the State Bank of India declined to roll over at the start of 2013.
Repayment of the Axis Bank loan could place the Maldives in a position where it has less than a month of imports in reserve – a potential crisis for an island nation 100 percent dependent on imports for basic subsistence.
The government meanwhile contends that it is not subject to termination and associated clauses relating to a contract it has deemed ‘void from the outset’.
“Under the terms of the direct agreement, these loans would be repayable if the concession was terminated early, as defined in the direct agreement. The government contends, however, that if the concession agreement is void ab inito, then these terms do not apply,” reads a special audit commissioned by the Auditor General.
“Under the terms of the direct agreement, these loans would be repayable if the concession was terminated early, as defined in the direct agreement. The government contends, however, that if the concession agreement is void ab inito, then these terms do not apply.”
Present situation
With arbitration pending and efforts to create a new management company having apparently stalled for the time being, the outlook for the airport remains uncertain.
Much will be dictated by the election in September. Former President Mohamed Nasheed has said he will invite GMR-MAHB to return should his party resume government, while the Progressive Party of the Maldives (PPM) has declared one of GMR-MAHB’s most voracious opponents, ex- Home Minister Dr Mohamed Jameel, as the party’s Vice-Presidential candidate.
The government’s special audit of the project shows the upgrade and construction of the new terminal was 25 percent complete as of October 31, 2013.
“In the meantime, all work on the ground on the improvement to the airport has ceased. Sensitive elements of the new structures that had been planned by [GMR-MAHB] are incomplete and exposed to the weather and at risk of damage – possibly closing off the option of re-using these elements to reduce the cost of any future development of the airport,” the report noted.
Former Transport Minister Dr Ahmed Shamheed, who was dismissed by the government in November 2012, warned in January 2013 the airport needed urgent work to reach acceptable standards, that was outside local capabilities.
“To get the airport to the right level, they will need to bring in outside help,” he told Minivan News at the time.
“The airport is in very bad shape right now and work is needed on the runway, all of which cannot be done without finance.”
Ibrahim Nasir International Airport was meanwhile dubbed the ‘Indian Ocean’s Leading Airport 2013′ at the Indian Ocean World Travel Awards on May 12.
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So Koli Ali Umaru Maniku's little brother Koli Mohamed Umaru Maniku has learned few trick from his elder brother's running of "Maldives National Shipping limited"
Koli Ali Umaru Maniku created so many empty shell companies to avoid damages, Koli Ali Umaru Maniku has lost count of number of empty companies he created to cheat the law and Insurance companies.
and this man Koli Ali Umaru Maniku in his "log book" very proudly say, Maldive is developing because of it "Stability" you should ask the crew of those ships that belong to Maldives National Shipping Limited" to know whats the meaning of "Stability" in this man Koli Ali Umaru Maniku's vocabulary.
Apparently from where he left shipping, His little Brother Koli Mohamed Umaru Maniku is taking care of the aviation by creating an empty shall of "Maldives Airport Company Limited."
Well done brothers keep up the good work, Maldives don't need your kind of stability anymore.
When will you be satisfied with the wealth you have and leave us poor defenseless citizens of Maldives alone in peace. I wonder.
The ACI warning is quite clear. There is a huge no-entry sign on top of the Maldives as far as foreign investors are concerned. Given the general election in September, there's no sane investor (apart from racketeers and goat dealing brothers), who is willing to come here. Why would they?
Firstly, there's no legal protection for them. Secondly, what the current regime says can be annulled by the next one that follows without any warning whatsoever.
With growing signs of political consolidation behind either MDP or PPM, we reamin optimistic that the current illegal regime may only last a few more months. Let's hope sanity returns sometime soon.
Reminds of the folk story in which fishermen sink their boat to teach the 'maakana', which kept resting on the mast a lesson. They taught that bird a lesson alright - and boy did we teach GMR,those pesky Indians a lesson!!
Terminating GMR-MAHB contract by declaring invalid from outset is a desperate legal move backed by a political facade influenced by kingmakers for their own personal gain. The average Maldivian will remember this event as a nationalistic one with Adhaalath rallying to reclaim the country's airport from the Indians. But upon observation of what followed after the termination makes the true intent of this whole facade very obvious. All other domestic airports in the Maldives is now given International licenses. When we take stock of those who own these airports the whole thing comes into light. Soon after the termination and coup de etat Champa Afeef procures shares of Addu airport for an undisclosed amount. maamigili airport operated by Buruma Gasim comes into full swing. All the while development of Male' International airport is halted in its tracks and left to rot.
Why now GMR- MAHB is appearing in reports and commets ? When GMR was operating the airport this malaysian company name was not even known.
I guess these MDP propaganda machine is trying to get Malaysian government involved in this .
GMR was given airport because they gave huge cut to Nasheed and how alliance and this whole deal is a corrupt deal.
Axis Bank can not demand the payment from Maldives before they need to demand the payment from GMR to whom the loan was given.
All these talks and news is just to create a fear among public without any solid substances.
GMR had earnings from this airport is 1000 times higher than other three airports and Male' airport was only airport that they were making profits.
If Nasheed win the election, again this guy Nasheed had promised GMR and India that he will give airport and will sell this country to India just to make fat ugly money for Nasheed own pocket.
Nasheed is one of the biggest corrupted person in Maldives along with Gayyoom.
@ kuribeeeeeeeeeeee
u just shut up man!!!!!!!!!!!!search inside urself first bfr u comment about NAsheed, their is noone in the country with a heart as his!!!!!!!!!!!!1
Hakeem Didi. First you shut big mouth.
Yes there is none like Nasheed in this country who has double face like Naheed.
This is not you own country as you thought and Nasheed during his regime he thinks that this was his own country and Maldivians are only member of MDP.
People like you and Nasheed had no tolerance against any criticism and you all expect very one to obey and bow the heads towards your cult leader.
Forget it, those days are gone and we will continue to strive in this democratic path and Nasheed is not a leader and he is corrupt activist.
Touché Kuribee 😉
@Kuribee.
Unfortunately Nasheed willfully is owned up by the people of this country. They do not seem to want no one else! Believe it or not!
This country is quarantined until come September, when Nasheed will be elected and sworn in, Insha Allah!
You can jabber all you want and at will, non stop 24 hours a day, and 7 days a week! Happy!
Stop whining about Nasheed and start talking about the millions Gayoom took from us. Why you say nothing about that?
During Gayyoom regime the income was much less than during Nasheed time.
What Gayyoom had managed to robbed in 30 years much less than what Nasheed had robbed this country in his three years period.
If Nasheed is elected by the people, I will respect him as a president . But that does not mean that I will obey all his commands and bow my heads and pray.
However , I doubt that he will ever be able to win any election in this cow try and we will see.
Now people are aware of his two faces and we know his is one person who can not live up to his promises.
@kuribee
At the end of Gayoom's 30 years, there were schools, health centres, mosques, jetties and mediocre electricity plants on each island in the country. A huge achievement we all have to admit, but people still lived in houses that just upgraded from thatch roofs and coral brick walls, majority students in these islands barely make it beyond O level. Now its time to move onto the next phase. which is inter-atoll transportation, better housing, sewage water networks, better electrification, industries such as guest house, mariculture, agrifarming, free healthcare etc.. Despite your personal vendetta against Nasheed, the only party that is coming out with a manifesto to do that is MDP. All others are still talking about Gaumiyath and Dheen dhemahettun 4 months to the election because they are still mesmerised by the 30 years. Please dont use your head to practise combing your hair, use it to think on your own, dont be so brainwashed and blinded not to see whats good for you and whats good for others.
Kuribee, please give us more information to prove your statement "What Gayyoom had managed to robbed in 30 years much less than what Nasheed had robbed this country in his three years period."
I am planning on voting for Nasheed but if you can prove what you have said, then there really is nobody else to vote for.
Kuribee statement shows that he values money above human life.
Under Gayyoom 30 years in power people were murdered for their political beliefs, tortured for standing against his personal views, exiled for not following his commands.
Gayyoom raped not only the country's finances, but also the lives of any Maldivians that opposed him.
So tell us enlightened one how do you justify your statement without showing your true colours, that you value money over life.
Nasheed had raped this country too and he had ruined our economy and he don't have a clue of how to run a country.
Nasheed came to power with a different constitution where the guy was not able to exercise his executive power as Gayyoom era.
If Nasheed was able to rule under the same constitution as gayyoom, we would have seen much worse than what we had experienced during Gayyoom era.
Proof is , despite the freedom that was given in the new constitution, Nasheed had rule like a dictator and he had breached the constitution and openly told that public that he will do what ever he want within and outside the constitution .
in 2008, when Nasheed took over the office, the country debt was 390 million and when Nasheed left the office on feb. 2012, the country total debt was over 990 million. How this happened? T
This happened because , he had done so much projects with no returns and those projects were even to his buddies at much higher values than even market values . From these projects , Nasheed get a cut . Look at GMR deal, Dhiraagu, MWSC, and even Thliafushi project with Reeco.
Most of the land reclamation was carried and was given to his associates at a much higher prices than market prices. From all these projects , Nasheed gets a cut to himself and for his party MDP.
MDP can not disclose how they get the money from and where these money are coming and who had given the money.
@mariyam on Sat, 18th May 2013 12:40 PM
"Kuribee, please give us more information to prove your statement..."
Please do not engage with this troll. You know very well, he cannot prove anything he says and he won't attempt that either, since he knows that full well. He will just repeat and rinse the same old broken record over and over again.
Look back at the history of this site, and you'll find that he's been stuck on a single note since, well, February 2012! The best action is to just ignore him. I have trained my eyes to completely skip anything with that name on. Advise others to do the same.
“Under the terms of the direct agreement, these loans would be repayable if the concession was terminated early, as defined in the direct agreement. The government contends, however, that if the concession agreement is void ab inito, then these terms do not apply.”
Wow! I can't believe this is coming from Auditor General of a country. Going by this logic, Maldives can terminate all loans, contract and agreements with whomsoever in this world and claim they are answerable to none. Before giving back the law books to Auditor General and his committee, he needs to be sent to a counselor to assess his IQ level.
Gmr was a weak invester in my Point of view. The Problem with Indian managing a hospitality Business port, Indians dont seem to know what Real hospitality is about. Hint. Its not about fancy structures alone.