GMR is sticking to the US$1.4 billion compensation claim for the abrupt termination by the Maldivian government in December 2012 of a concession agreement to develop the Ibrahim Nasir International Airport (INIA).
“The forceful takeover of the airport by Maldives government amounts to repudiation of a valid contract and therefore damages, including loss of future profit has to paid. Thus, GMR’s claim is $1.4 billion,” Indian media reported the Bangalore-based infrastructure giant as saying in a statement on Friday (April 25).
GMR noted that the Maldivian government had acknowledged for the first time that the company was owed compensation.
Prior to departing for Singapore on Thursday, President Abdulla Yameen told the press that the government would have to pay compensation to GMR upon conclusion of the arbitration process currently underway.
Asked if he was confident the outcome of the arbitration would be favourable for the Maldives, Yameen said: “The reality we have to accept is that a government with full sovereign powers made an agreement with a foreign party and leased [the airport]. This is a government, and what preceded this was a government as well. So believe we have to pay them some kind of financial compensation. “
He added that the government’s objective in the arbitration hearings was to lower the compensation amount.
If the judges on the arbitration panel accept the government’s arguments for nationalisation or expropriation, Yameen said the compensation owed to GMR could be smaller.
“We’re going to have to provide compensation in any case,” he conceded.
The US$1.4 billion sought by GMR for “wrongful termination” exceeds the annual state budget whilst the national debt is expected to rise to MVR31 billion (US$2 billion) this year.
Earlier this month, Yameen had said that the out-of-court settlement sought by GMR was too high, and that he would now await the outcome of the arbitration proceedings, which could take up to another two months.
Despite the pending arbitration decision, expansion and development of INIA was among the five mega-projects for which the government was seeking investors at the Maldives Investment Forum held in Singapore’s Marina Bay Sands yesterday.
President Yameen also met officials of the Beijing Urban Construction Group yesterday, who “expressed their interest in engaging in the infrastructure development of the [INIA],” according to the President’s Office.
Void ab initio
In December 2012, the administration of former President Dr Mohamed Waheed voided the 25-year concession agreement with the GMR-led consortium.
The US$511 million contract awarded by his predecessor former President Mohamed Nasheed – following a bidding process overseen by the World Bank’s International Finance Corporation (IFC) – was the largest foreign direct investment in the country’s history.
Waheed’s government – of which President Yameen’s Progressive Party of Maldives was a coalition partner – declared the contract ‘void ab initio’ – invalid from the outset – and gave the company seven days to leave the country.
After GMR received a stay order for the eviction from the Singapore High Court, the government successfully appealed the injunction at the Singapore Supreme Court.
Chief Justice Sundaresh Menon declared that “the Maldives government has the power to do what it wants, including expropriating the airport.”
At a press conference in the wake of the airport takeover, Finance Minister Abdulla Jihad – who retained his post under the new administration – said that the Maldives would pay whatever compensation was required “however difficult” while Attorney General Azima Shukoor expressed hope that the compensation would be lower than anticipated.
A special audit conducted by the Auditor General’s Office in early 2013 found that as of October 31, 2012, GMR Male’ International Airport (GMIAL) had completed 25 percent of the refurbishments and upgrades to INIA planned for the end of 2014, and had been invoiced by its contractor for US$69 million.
“Significant progress had been made in some areas – for example, 87 percent of the material for land reclamation had been dredged,” the report (English) stated.
“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] 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 concluded.
After examining the bidding process, the audit report stated that evidence to back allegations of “improper interference” during technical bidding process “is not conclusive on this point”, and deferred the matter to the Anti-Corruption Commission (ACC), which ruled out corruption in June 2013.
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This one goes out to Kuribee, Hero, Ann and the rest of the PPM lapdogs paid to post crap here.
"HA!"
Hmmm India meehunnaa evves kameh havaalu kuraakah nuvaane. IGMH ga ves vissaara vehuniyyaa furaalhun kotari ah fen vehey than than adhi ves ebahuri.
The only way to avoid a hefty compensation is to
a) get political pressure through the Indian government,
b) show GMR of an alternative opportunity
c)get that money from another investor
d) declare that the just like the contract, the government awarding the contract was void ab initio and so contract had no value
e) just declare government doesn't care about compensation and won't give a single penny.
I think as the situation stands option d and e are the most probable.
To all the people who supported PPM, Adhaalath, JP and everybody else: what did you think was going to happen?
I am still hopeful that The Supreme Court can over rule the Singapore Arbitration.
The contract may be legal, but the fact is it was a rush job, fast tracked by Anni, and thrown over the fence, without really considering the nations best interests.
No doubt pushed to the corner, by the then opposition, who was closing the doors to make this happen.
Mordis, as a nation have to pay the consequences.
But, what a price to pay.
Whew!
The settlement will bankrupt you arrogant self opinionated retards.....and teach your politicians not to invalidate a legally binding international contract for political expediency.
I can't see any Indian infrastructural company investing in the Maldives in the foreseeable future.
So glad the Maldives investment jamborees are taking place in Singapore, Japan and China.....India does not want you or need you.
Not much evidence of Singaporean, Japanese, Chinese or Arab companies falling over themselves to invest in the Maldives.....oh dear, what a shame, never mind.
Maybe your president should hold his investment roadshows in Mogadishu, Harare, Pyongyang and Karachi.....and good luck to him.
Gayoom and company won't pay a cent. It's just the risk foreigners take when doing business here. Don't invest more than you can afford to lose because these guys only know how to lie, cheat and steal. They lie so much that they actually believe they're telling the truth. Or maybe it's justified because they're stealing from infidels and we're not real people.