Indian infrastructure giant GMR has claimed US$803 million in damages from the government of Maldives for its abrupt and wrongful termination of a concession agreement to develop Ibrahim Nasir International Airport (INIA).
The claim comes after a Singaporean arbitration court in June found the government of Maldives and state owned Maldives Airports Company Pvt Ltd (MACL) “jointly and severally liable in damages” to GMR for the termination of a “valid and binding” concession agreement.
In a letter to the Bombay Stock Exchange, GMR’s subsidiary GMR Malé International Airport Private Limited (GMIAL) said it had “submitted its claim for damages amounting to US$803 million.”
“In addition, a plea for award of further damages for loss of reputation caused to GMR as a consequence of wrongful repudiation of the concession agreement has also been made to the Arbitral Tribunal, the quantification of which is subject to expert evidence.”
The arbitration has proceeded in two phases, the first phase which ended in June determined liability while the second will determine compensation.
President Abdulla Yameen’s administration called the first phase verdict a success, claiming the arbitration court had capped the compensation amount, and have said the government would not be required to pay GMR’s initial claim of US$1.4 billion – a figure that eclipses the annual budget.
Minivan News understands the concession agreement does allow MACL to terminate the agreement for reasons of public interest and imposes a cap on losses in such circumstances.
Tourism Minister Ahmed Adeeb has on several occasions declared that the government is confident it can pay back any losses incurred, while Attorney General Mohamed Anil has said the government will honor the verdict to uphold investor confidence.
Yameen has previously said the compensation claim will amount to a “manageable” US$ 300 million. In a speech in August, he appeared to blame GMR for the company’s eviction, claiming it had failed to undertake a political risk assessment.
“At a time when you had a very heightened political environment in Maldives, at a time when the parliament was polarised, it was a pity that political risk assessment was not undertaken by GMR. Whenever we hear about GMR, the issue that comes right to the limelight is their inability to assess political risk at the time,” he said.
GMR won the 25-year concession agreement to develop and manage Ibrahim Nasir International Airport under former President Mohamed Nasheed. The US$511 million deal was the country’s single largest foreign investment.
The opposition at the time attacked the deal as part of a vitriolic anti- government campaign, which eventually led to Nasheed’s ouster in February 2012.
In December 2012, new President Dr Mohamed Waheed declared the agreement void ab intio – or invalid from the outset – and gave GMR seven days to leave the country.
The agreement’s abrupt termination saw cooling of relations with neighbor India and questions regarding foreign investor confidence in the Maldives.
The World Bank in December said GMR compensation will place severe pressure on the country’s already “critically low” foreign reserves.
The MDP has called on the government to reinstate the contract, while Nasheed has warned of an “imminent sovereign debt crisis” should Maldives be forced to pay the initial US$1.4 billion.
The government has recently revealed that a new agreement with China’s Beijing Urban Group and MACL to develop INIA were proceeding smoothly, with work expected to begin next year.
GMR were reported in the Indian media to have expressed surprise that the government of Maldives had entered into the new agreement, penned during the visit of China’s President Xi Jinpeng in September.
Related to this story
GMR wins arbitration case, tribunal deems airport deal was “valid and binding”
Government will honor arbitration verdict, says attorney general
GMR not worried about airport politicking, will invest US$373 million
Cabinet voids US$511 million GMR contract, gives airport developer seven day ultimatum to leave
GMR surprised with decision to give airport development to Chinese firm
(0)Dislikes
(0)Related Posts
Behind the bars: Inside the shelter for the Maldives’ unregistered expats- Half of workers in Maldives are foreigners: Economic Development Minister
- BBC, National Geographic experts joining LUX* Maldives 2013 underwater festival
- Nasheed announces former university chancellor Musthafa Luthfy as running mate
- Convicted drug kingpin leaves for Sri Lanka
- Comment: Our children’s grandchildren’s world
We have heard that GMR was going to sue former President Dr Waheed himself. Any further information on this?
The time of reckoning has finally arrived.
You guys have still got time to leave immediately on jihad and escape the bailiffs.
He he he.
GMR should be charged for bribing Nasheed and his gangs and millions of dollars are being given as a bribe to get the contract signed.
GMR also should be charged for forcing Mohamed Shihab to signed on addendum after the initial contract was fined .
GMR also should be charged for forcing the Gov., to accept the absorb the Airport Tax which was against our constitution .
GMR is the cardinal mistake of MDP. Otherwise MDP would be in power today.
With the delicate regional balance, and without regard to Pakistan one wonders why a strategic asset was given away to an Indian company, if not for some thing else.
Lets be honest. MDP cocked up with GMR.
Not only that. To win in 2018 MDP would have to come clean on GMR too.
US$ 803 plus damages to loss of reputation. This is subject to expert evidence. This means loss incurred on drop in GMR stocks at Bombay stock exchange, and experts will give the average extent of the fall. That would be another 400 million. Easily 1.2 billion. Azima, Waheed, Ilyas Ibrahim, Athireegey Faizal, MVK, Adhaalath, MAG and YAG should pay for this loss to the nation.
All big projects involve corruption, be in in Japan or US or UK. Naturally MDP has been suspect since the day GMR was awarded the contract.
So there is REAL job for MDP to distance itself out of the suspicions. Its a job that would not go away.
Bought your jihad getaway tickets yet?
Do transit through Karachi and not through Colombo or Mumbai. I hear PIA does special jihad packages for true believers.
If you transit through India you will be locked up in a basement dungeon and the key thrown away.
GMR did some patch work with plywood to give a cosmetic "upgrade" to the terminal and is now asking for US$ 800million ?? What a joke!!
Just because they are claiming this amount doesn't mean its a fair amount. That will need to be determined. In the end whatever amount is to be paid to these crooks as a "ransom" will need to be paid and the Maldives will do so. This payment is ofcourse as a result of mistakes made by the previous government.
We are so so lucky and relieved that we are out of the clutches of Indians! If not for the fact the contract was awarded to an Indian company it would have been fine.
No worries GMR. You shall be paid compensation for the mistakes made by our own leaders although in reality you deserve none!
Maldivian leaders should learn from this fiasco and never ever give any major contracts to any Indian company.
This the reason why the Govt.is force to defact wesern world,joining china and middleeast
MissIndiaAgarwaltheThug, GMR shall not be paid a dime and all accounts have to be set forth right. The small and medium level businesses first needed to be compensated by GMR because GMR took their businesses. GMR managed to secure a contract to Develop an airport not to takeover the businesses of the locals having businesses at the airport. Developing Male'International was only a pretext. The ultimate aim was occupation and colonizing the country to bring people of the likes of MissIndiaAgarwaltheThug. High Commissioner Mullay managed to victimize officials in the President's Office and other Senior govt officials because of their personal weaknesses towards money and behavior. Arm twisted them and secured an all out sale of the most important asset of the country and risking the souverignty of the country. MissIndiaAgrawalthethug, mere jealousy runs deep in your blood. Ask for a cure and I will help guide you to NIMHANS in Bangalore in India. They sure have been treating people of your sort from the time of the British Raj. Only they MAY be able to help you. Leave the Maldives and the Maldivians to attend to themselves so that we will be able to provide you with a job to feed you and your lots. Maldivians have lived through the ages without your like. However, it has always been people of your sort who annoy us, the latest being GMR and High Commissioner Mullay.
GMR is an albatross around neck of MDP. Yet without question, MDP members still believe that GMR is a shining necklace. Talk about blind faith.
Had it not been for GMR, the ruling party would still be MDP
This money should be paid to GMR on the condition that GMR reveals who they bribed..
Some names would be revealed for sure.
As of may this month GMR stock prices was better than when they were contracted. Would this hold in court.
I don't know.
Except for future potential loss of revenue, GMR did not seem to have lost face value.
What @adam and the rest of the doomsayers so hilariously choose to forget is that GMR only had less than 5% of the allotted time to do the improvements, and it was administered by the World Bank to prevent bidding fraud.
Now they're whining about vengeance.
It's like a heroin-addled paatey snatching your wallet, only to find out that you have no money and start whining.
And that's pathetic.
oh. This is a good example for the whole world not to trust weak administration and legal frame work in Maldives. They talk big but they do not have any ......
Investor (Chinese ) will be teaching the lesson to Maldives now.
Lets see.
GMR profit soared in millions after tailing over our airport and their share values had gone rocket high ?
Profit from our airport was highest and even 500 times more than what they were earning from 2 airport that they operate from India and yet they never spent a single cent from their own money.
GMR should be charged on corruption of brining Nasheed and his Gangs in Maldives.
Good lesson for our leaders not to play with foreign investors. If they are not good take appropriate manners to bring them to negotiation table with out kicking them.
Now Azima will not pay, Waheed will not pay. We poor people will pay.
Truly Yaamin would have stopped this without going in to this further. This reflects bad on the country.
Yaamin wants country to be Singapore.
01. Do we have strong legal frame work.
02. Do we have strong administration.
The auditor general was removed over night by changing the law. ???????
Whoever against PPM will be removed with no concern.
big talks
big plans
One year gone - Did nothing ..............
elected by peoples vote.
Asking investors to come and presenting in Singapore saying investor friendly country.
No one will come this way. why people in power cannot see through problem and save country. Money, Corruption, gangsters, rape and all evils for people from Yaamin, Adeeb , and our Economic Minister Saeed. He is also getting a portion from Adeeb now.
With this humongous and stupendous DEBT, bankruptcy is staring you in the face. Oh dear what a pity! Expect your cost of living to quadruple in the next twelve months. Your cheap Indian imports won't be cheap any more. The fun stuff you like to inhale and inject, supplied by your Sunni mates in Afghanistan, will also cost more.
Indian investors should stay clear of the lawless and unstable ( politically and mentally ) Maldives and concentrate on markets where there is some understanding of international contracting procedures.
Chinese investors should take the payment up front and invest at their peril.
The rest of you can go on jihad to Syria for all I care. Just keep India off your itinerary.
Some people assume that, just because the World Bank was involved, everything did go transparently in this doomed project. No one points out the fact that Indian accountants were employed by the World Bank to do their evaluations. That's not a bad thing per se, but does bring in questions of impartiality.
There were a number of other high profile bidders, most of whom were far more reputable as well as experienced in the field and yet GMR won the contract on some dubious financial terms.
In short, yes, MDP screwed this up badly and all by themselves!
As for 2018, MDP has got a lot of work to do, to come clean of corruption and allegations of corruption. Their administration was mired in one shady deal after the other.
Unless MDP can come up with a way to guarantee ZERO tolerance for corruption and provide iron clad ways to eliminate it, Maldivian will never trust them again.
MissIndiaAgarwaltheThug; Stop Blabbering and leave the Maldives and Maldives and get yourself admitted to NIMHANS. Need any help?
Surprise surprise to hear that China will now develop the airport.... Was a new tender announced or is the Maldivian Government now controlled by China instead........ Ummmm does not every party not have corruption in Maldives with their nice houses cars and resorts. Money seems to go to money in Maldives or still ruled by Gay moon.......
@MissIndia. You should leave this country instead of hiding behind the diplomatic arena .
You are part of corrupt deal of GMR including the Indian branch of IMF. You all have taken huge cut from GMR deal tother with Nasheed.
You thought this country will go bankrupt when you demanded to pay 100 million dollars in a week time, but we have paid .
You can not bully this country and we don't need corrupt Indian companies and thier blood sucked money from poor indian people to invest in Maldives.
The GMR deal may have been the best of deals, or the ultimate failure of President Nasheed's government!
Let this be debatable and in doubt!
The proven fact is, that the termination of the GMR agreement, by the government and Airports Company, was simply outrageous and totally wrong!
If there were corruptions or scams in the deal, it should have been proven. And if there were any, let justice do the rest!
There was no necessity for high profile peoples to convince the public that there was no risk or loss involved in the termination!
Under the present circumstances, it is difficult to guess if anyone can be interested in developing this airport!
Let us think that there is someone interested!
Will they be doing it for free?
What price are we up against?
Will it be a better deal than the one with GMR?
If ever this country is going to come to terms with someone new, or even renewing agreement with GMR with regards to this airport, there is necessity to let the public see the exact terms in writing, such that peoples may not be taken for another ride!
@Maldivian. You have said well. There is an issue with the termination and also with the award of the contract to GMR as well.
Instead of continuing with the GMR contract, the termination was a better off for the country in the along term.