Category: Business & Tourism

Maldives business news

“Compromise” essential for growth of independent travel in the Maldives: Lonely Planet author

This story was originally published on Minivan News’ spin-off travel review site, Dhonisaurus.com.

There remains huge potential to expand independent travel across the Maldives’ ‘inhabited islands’, though only a “tiny proportion” of tourists would presently accept legal restrictions in the country without it becoming more inviting for holidays, the author of a major new Maldives travel guide has claimed.

Under the country’s laws, traditional holiday staples such as the sale and consumption of alcohol and pork products, and women publicly sunbathing in bikinis are outlawed unless on designated ‘uninhabited’ islands set aside exclusively for resort developments.

Tom Masters, a travel writer and journalist who has authored the latest Lonely Planet travel book to focus on the Maldives – released back in October – said he ultimately believed local islands can provide independent travellers with “sufficient attractions”, even within the strictly conservative laws practiced outside of the country’s resort islands.

“However, I think only a tiny proportion of potential visitors would be happy to accept such a number of restrictions on their annual holiday, and so if some degree of compromise could be reached on issues such as alcohol or sunbathing, then the number of travellers opting for island tourism over that in an expensive resort would rise enormously,” Masters told Dhonisaurus.

Despite the claims, the Maldives Ministry of Tourism, Arts and Culture has said that even with the emergence of a number of boutique guest houses around and the planned expansion of domestic flights routes in the Maldives, the market for independent travel will remain “quite insignificant”.

Ultimately, no law can be enacted against the tenets of Islam, according to the Maldivian constitution.

Even last month, debate took place in parliament about the legality of selling alcohol in the Maldives, both in terms of outside the country’s resorts and even on its exclusive island properties, with a bill potentially outlawing any form of alcohol sales being narrowly accepted by the People’s Majlis.

“Great changes”

The Maldives has undergone great changes in terms of tourism and national development since the Lonely Planet last published a guide on the Maldives in 2009, according to author Tom Masters.

“The last [Lonely Planet] guide was researched and published in 2009, a time of great optimism and change for the Maldives after the election of President Nasheed. The changes introduced by his government were a fantastic step in the right direction for tourism, I think, especially given the global financial climate, which made relying on high-end tourism alone a dangerous path,” he said.

“The biggest change was undoubtedly the opening of guest houses on inhabited islands and the creation of a national ferry network. These were both fantastic for the independent traveller and a great way to make visiting the Maldives affordable.”

While Masters remains optimistic for further developments in independent travel in the Maldives, he added these feelings were tempered by the challenges facing the market – not least in better managing the expectations of travellers within the context of local culture and practices.

“The travellers I met staying in guest houses were all very culturally sensitive and of course came knowing that alcohol, bikinis and pork weren’t going to be available. However, many suggested that in the future some degree of compromise might be possible – perhaps allowing beer drinking inside guest houses or the opening of closed-off ‘Westerner’ beaches where tourists could swim and sunbathe without upsetting locals,” he added.

“I also think that the ferry network needs to be invested in and improved, as at present it’s slow, unreliable and hard to access as an outsider. Online timetables, better vessels and more frequent boats would all make independent travel far easier and appealing than it is at present.”

Masters stressed that the Maldives remained “overwhelmingly a luxury destination” – a tag he did not anticipate would change drastically unless island tourism could be made more “inviting”.

“The financial demographic hasn’t much changed, but the geographic spread of visitors has enormously – the Chinese have risen from a tiny part of the market to one of its biggest groups, which in turn has changed the feel of many resorts where large groups of Chinese visitors predominate. The independent traveller is still a tiny and unknown quantity in the Maldives, but one that I’m confident will continue to grow as long as the new government doesn’t try to further restrict their behaviour,” he said.

“The question is whether that is in the new government’s interest. As the new government is made up of many resort owners, I’d be very surprised if they felt that encouraging island tourism was a priority, which I think is a shame.”

Forty years of tourism

With the Maldives celebrating 40 years since the inception of tourism, the Ministry of Tourism, Arts and Culture has spent the year trying to claw back consumer confidence in the destination, which was damaged by political instability during the early months of 2012.

The ministry has also been working to outline a fourth long-term master plan for pursuing growth within the Maldives travel sector – now expected to be unveiled before the end of 2012.  Independent travel will be included in this focus.

From a Maldives perspective, the independent travel market market is represented mainly in the country through guest houses and safari/dive vessels, being described by veteran guide book author Adrian Neville as “a weakling in need of love and nurturing”.

Speaking to Minivan News last month, Deputy Tourism Minister Mohamed Maleeh Jamal told Minivan News that amendments approved in 2010 to the country’s Tourism Act had allowed for a renewed focus on guest house development.

“There is opportunity in the area [of independent travel] with growth in domestic flights that is being seen. [The island of] Hulhumale’ already has some very good quality guests houses and boutique bed and breakfast properties,” he said.

“However, guest houses represent a minute number of beds and that number will continue to remain quite insignificant.”

Until 2008, guest houses had been banned by Maldivian law since May 1, 1984.

Back in June, Minister of Tourism, Arts and Culture Ahmed Adheeb said that it was difficult to say where authorities stood on guest house development as the industry was still relatively niche compared to the established resort sector.

“The Maldives continues to be branded as a luxury destination within the tourism market. It is a bonus therefore that these guesthouses allow us to supply mid-market demand,” he said at the time.

“We are formulating our plan right now. This will look specifically into how many guest-houses have been built and how they contribute to the economy,” he said.

However Raki Bench, founder of the Guest-houses in Maldives website which offers specially prepared packages to experience a more independent holiday experience in the country, has been critical of the role played by the present and former government to develop the industry.

Bench added in recent years, despite previous government commitments to provide more mid-market accommodation for visitors wanting to explore the country’s inhabited islands, further support had been lacking.

“The government has not really been helping guest-houses at all. It is a small sector, but it is showing growth within the wider tourism industry. I don’t see any promotion from authorities,” added Bench, who said he was realistic about the economic reasons for this.

“I do understand why this is the case. After all what is the point in promoting an industry with a value of US$50 a night when you compare that to what resorts can make?” he said.

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Maldives without budgetary provisions to cover GMR’s US$800m compensation claim

Financial authorities in the Maldives have said no budgetary provisions presently exist to cover an estimated US$800 million in compensation being sought by Indian infrastructure group GMR after the government abruptly terminated its agreement to develop Ibrahim Nasir International Airport (INIA).

Finance Minister Abdulla Jihad told Minivan News today that no mechanism was currently budgeted should the Maldives face a multi-million US dollar bill for evicting GMR, but stressed it was not for the company to decide on any eventual payment.

GMR has said that the proposed US$800 million claim was based on its “provisional estimates” and that the company had also taken into account the Maldives’ ability to cover such payments if compensation was awarded by the Singaporean courts overseeing arbitration.

However, Jihad today played down fears that any potential fine could prove perilous for the Maldives’ economy, as well as attempts to reduce its spiralling budget deficit, stating that any possible fines would be set by the Singaporean arbitration court hearing the dispute.

“We will deal with the matter when we know the amount of compensation to be paid,” he said. “GMR cannot decide, it will be down to the court [hearing the arbitration].”

Jihad also claimed that there had been no communication between GMR and the Maldives government over compensation as the matter was presently being dealt with through arbitration.

“There has been no communication [with GMR] over the levels of compensation,” he said.

Budget battle

With the compensation case pending, the Maldives government is this month attempting to reduce its spending as it also faces calls to cover debts from its neighbours and pressure from the International Monetary Fund (IMF) to reduce a ballooning fiscal deficit and protect dwindling state reserves.

The Indian government last month requested that the Maldives repay US$100 million in treasury bond funds by February 2013 – a matter it claimed was not related to a diplomatic row over the airport dispute at the time. Local media has previously reported that state reserves could fall to just US$140 million (MVR2.2 billion) once the payments are settled.

It is amidst these budgetary challenges that GMR has said it was seeking up to US$800 million in compensation following the termination of its US$511 million concession agreement signed under the former government back in 2010.

“Preliminary estimate”

GMR’s chief Financial Officer (CFO) Sidharath Kapur told Minivan News today that the sum was a “preliminary estimate” based on a number of factors including investments made by the company, debt equity and loss of profits as a result of the contract termination.

Kapur added that on Tuesday (December 11) the company had communicated with Maldives Ministry of Finance by sending an official letter outlining its concerns that the contract had been “wrongfully” terminated without respect for the agreed procedures.

Speaking to the India-based Economic Times newspaper today, Government Spokesperson Masood Imad suggested GMR had been a victim of failing to perform proper due diligence before signing a contract with the former government – which was ousted following a police and military mutiny in February 2012.

A particular point of contention for GMR during the contract’s lifetime was an Airport Development Charge (ADC) – a US$25 fee for outgoing passengers stipulated in the concession agreement – which was blocked by the then-opposition Dhivehi Qaumee Party (DQP) in the Civil Court on the grounds that it was a tax not authorised by parliament.

Former President Nasheed’s administration chose to honour the original contract, and instructed GMR to deduct the ADC revenues from the concession fees due the government, while it sought to appeal the Civil Court ruling.

However, the Nasheed government fell in February 2012 and the opposition inherited the result of its court victory, receiving a succession of bills from the airport developer throughout 2012, despite the government’s insistence that the January 5 letter from MACL outlining the arrangement was no longer valid.

Government spokesperson Imad alleged that the ADC dispute has resulted from a lack of transparency by the former administration. “We feel the former government should have been transparent with GMR on the ADC issue,” he was quoted as telling the Economic Times today.

However, Kapur rejected the governments’ claims, stressing that its tender agreement to develop INIA had been overseen by legal and financial experts including the International Finance Corporation (IFC), a World Bank entity, as well as the certified approval from the former Attorney General Ahmed Ali Sawad.

“The IFC had clearly said that there are no further approvals required for the ADC. We were in compliance with all laws and all approvals had been taken as backed by the then attorney general of the Maldives,” he said. “Beyond that, what further due diligence could we do? Any international bidder would have taken comfort in that level of due diligence.”

With GMR’s calls for compensation currently being heard by the Singaporean judiciary, Kapur said the company believed there was a high probability it would be awarded financial remuneration to be paid by the Maldivian government.

Pointing to the verdict given by the Supreme Court in Singapore earlier this month, Kapur said that in allowing the Maldives government to expropriate the airport, the provision of compensation was required to be given to the company.

“What the appellate court has said is that appropriate compensation must be paid.  [The Maldives government] have the right to do as they wish as long as compensation is paid, this is binding on the Maldivian government,” he said.

While expecting a favourable outcome in its calls for compensation, Kapur added that the company was aware of the Maldives’ present financial vulnerabilities as well as its ability to cover any such payments.

“The possibility of getting compensation is high, but [the Maldives government’s] ability to pay is unknown,” he said.

Kapur added that in other international tribunal cases such as this, there were a number of methods that a court can use to ensure compensation is implemented. However, he said it was still too early to speculate on what form these methods may take in the case of the INIA dispute.

“Specific mechanisms”

Meanwhile, in a letter sent to the Maldives’ Ministry of Finance and Treasury, Andrew Harrison, CEO of the GMR Male International Airport Limited (GMIAL) that ran INIA under the agreement, reiterated the company’s argument that there had been “specific mechanisms” established to terminate the contract under specified circumstances.

“There is no suggestion that any of the circumstances arose,” the letter was reported to have read, according to the Economic Times.

Harrison was also said to have claimed that despite the present government’s stand that the contract was “void ab initio” or invalid from the beginning, the government “also warranted and specifically represented that the Concession Agreement was valid, legal and binding.”

“Further, as part of the closing of the financial transaction on 28 December 2010, the then Attorney General of the Maldives rendered a formal legal opinion confirming that the Concession Agreement was lawful,” the letter was said to state.

Minivan News was trying to obtain a copy of the letter at the time of press.

Smooth takeover

Management of INIA was taken over by the state-owned  Maldives Airports Company Ltd (MACL) on Saturday (December 8 ) after the Singaporean Supreme Court had overturned an injunction blocking the Maldivian government from voiding its concession agreement with GMR.

Both GMR and the MACL have this week praised the management handover as “going smoothly” as the government began planning for the future of INIA beyond the aborted privatisation plan. The termination of GMR’s contract officially ended the largest single foreign investment project in the country’s history.

On Tuesday (December 11), the Maldives cabinet recommended the formation of a government-owned company to run Ibrahim Nasir International Airport (INIA)

Looking towards the future of the airport, the cabinet recommended that Male’ International Airport Ltd be formed with 100 percent government shares, while claiming full authority to operate and develop INIA through a special contract with the Maldives Airports Company Ltd (MACL).

Speaking to Indian media earlier this week, President Dr Mohamed Waheed Hassan Manik has dismissed suggestions that China urged the Maldives to push out the Indian company.

“The only significant cooperation we have with China at this time is through development assistance… like building the museum, housing projects. I don’t think India should worry about it at all,” Waheed was quoted as saying in the Hindu newspaper.

The claims were made as Maldives Defence Minister Colonel (Retired) Mohamed Nazim departed to China for a five-day official visit said to be focused on securing its assistance in developing the Maldivian military.

The President had claimed that the Maldives was presently “not looking for a foreign investor” to develop the international airport, with the government announcing that it was undecided on whether any new privatisation agreement would be sought in future.

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Maldives airport operator praises “smooth” handover as government remains undecided on INIA future

The Maldives Airports Company Limited (MACL) has said there has been no disruption to services at Ibrahim Nasir International Airport (INIA) after it resumed management of the site from infrastructure group GMR on Saturday (December 8 )  – a claim backed by several resort operators and airlines.

Indian-based GMR yesterday handed INIA over to the state-owned Maldives Airports Company Limited (MACL) after the Maldivian government had voided its concession agreement, giving the company seven days to leave the country.

The sudden eviction of the developer – which won a 25 year concession under the former government to manage and upgrade the airport – scraps the project, which at US$511 million was the single largest foreign investment in the Maldives.

Upon reclaiming management of the airport yesterday, MACL Managing Director Mohamed Ibrahim told Minivan News that the handover had gone “smoothly”, with INIA continuing to operate over the last 24 hours as it had done under GMR.

“We have the same staff and equipment here as before [the handover]. Two years back we handed over the same equipment to GMR and there has been no discontinuation of service,” he said.

As part the GMR’s concession agreement, aside from developing an entirely new airport terminal building, the company had also undertaken work to renovate and update INIA’s existing terminal structures and operations – including retail and baggage handling facilities.

With MACL once again managing the site, a senior services manager for one of the largest airlines presently flying to the Maldives told Minivan News that it had experienced “no issues at all” in terms of operating in and out of the country since the handover.

Similarly, the general manager of a resort in Male Atoll also stressed that there had been no disruptions to service.

“Certainly so far there has been no impacts on our arrivals or departures, things seem to have gone smoothly,” the general manager said.

Future direction

When contacted about the future for the airport post-GMR, the President’s Office today told Minivan News that no decision had yet been taken on when – or if – the country would look to tender a new privatisation agreement for the site.

“Nothing of that kind has been decided,” said President’s Office Media Secretary Masood Imad.

Asked as to what action would be taken over the existing structures put in place by GMR before work on its proposed new terminal was halted over a permit dispute earlier this year, Masood questioned why the President’s Office had been contacted over the technical “nitty gritty” of the airport.

“We don’t micromanage all aspects of the airport, these are questions for the Transport Ministry,” he said.

Development conference calls

Meanwhile, the religious Adhaalath Party, which forms part of the government coalition of President Dr Mohamed Waheed Hassan, today called for a national level conference to be held on how INIA should be developed and operated in future.

Speaking at a press conference, party President Sheikh Imran Abdullah told local media that the airport development should not be delayed, calling for a conference to be held to air opinions on how best to proceed in future – not ruling out foreign expertise if needed.

“All people involved in this sector should come together soon for a national conference, the result of which should be a vision of how the airport should be operated in the future,” he was quoted by Sun Online.

Sheikh Imran was not responding to calls from Minivan News at time of press.

In recent months, the Adhaalath Party has been among several key government-aligned parties working to oppose the GMR agreement.

Sheikh Imran has previously predicted there would be “some unrest and damage” should the GMR deal be annulled, but nonetheless urged people to come out and support the calls for nationalisation.  The GMR deal was a 25 year concession agreement, with the airport still belonging to the government.

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Government takes over airport, evicts GMR

Indian infrastructure giant GMR has handed Ibrahim Nasir International Airport (INIA) over to the state-owned Maldives Airports Company Limited (MACL), after the Maldivian government voided the concession agreement and gave it seven days to leave the country.

The sudden eviction of the developer – which won a 25 year concession under the former government to manage and upgrade the airport – scraps the project, which at US$511 million was the single largest foreign investment in the Maldives.

GMR had clung to the terms of its concession agreement while the government fanned growing nationalistic and anti-India sentiment. On November 27, President Mohamed Waheed’s cabinet declared the agreement ‘void ab initio’ – invalid from the outset – and ordered the developer to leave.

With arbitration proceedings already underway in Singapore over the contested airport development charge (ADC), GMR received a stay order on its eviction and appeared confident of its legal position even as the government declared that it would disregard the ruling and proceed with the eviction as planned.

On December 6, a day prior to its eviction, the government successfully appealed the injunction in the Supreme Court of Singapore. Chief Justice Sundaresh Menon declared that “the Maldives government has the power to do what it wants, including expropriating the airport.”

That verdict, effectively legalising the sovereign eviction of foreign investors regardless of contractual termination clauses or pending arbitration proceedings, was “completely unexpected”, according to one GMR insider – “the lawyers are still in shock”.

A last ditch request for a review of the decision was rejected, as was a second attempt at an injunction filed by Axis Bank, GMR’s lender to the value of US$350 million.

Following a meeting with staff yesterday, GMR issued the following statement:

“In deference to the orders of the Court of Appeals, Singapore; GMR Male International Airport Ltd (GMIAL) will facilitate a smooth takeover of the Ibrahim Nasir International Airport (INIA) by the Maldives Airport Company Ltd (MACL), effective midnight tonight.

GMIAL has been assured that as a result of this takeover all its employees, suppliers and other interested parties will not be put to any inconvenience. GMIAL remains committed to finding a suitable solution to this situation. We are taking requisite steps to work out the compensation receivable from the Government of Maldives, keeping in mind the judgement of the aforementioned court and the concession agreement dated 28th June 2010.

All actions as above are without prejudice to our legal rights and statements made before various courts/tribunals where matters are currently being pursued or likely to be taken up.”

An invitation-only press conference to mark the handover was held by Defence and Acting Transport Minister Mohamed Nazim in the airport VIP lounge at midnight. Minivan News understands that GMR did not participate for legal reasons.

During the ceremony, Finance Minister Abdulla Jihad presented the official handover documents to MACL Managing Director Mohamed Ibrahim, and said that the Maldives would pay whatever compensation was required “however difficult”.

Economic Minister Ahmed Mohamed claimed the eviction would enhance investor confidence:

“Investor confidence will only increase when they know that Maldives will do everything in accordance with the law,” Haveeru reported the minister as saying.

Attorney General Azima Shukoor expressed hope that the compensation would be lower than anticipated.

Estimates as to the amount of compensation for which the government is liable have ranged from the US$220-240 million GMR estimated it has already invested, up to US$700 million – a sizeable chunk of the country’s GDP.

Apart from the size of the compensation is the Maldives’ ability to ultimately pay, given the crippled state of its domestic economy.

Finance Minister Jihad in late October warned that the Maldives would be unable to pay government salaries without a promised US$25 million loan from India.

A month later, amid rising anti-India sentiment over the GMR issue and a diplomatic incident triggered by the government’s spokesperson, Jihad described India’s calling in of US$100 million in existing loans as “not a major concern”. The debts, he said, would be paid from the state’s reserves, which local media at the time reported could fall to as low as US$140 million (MVR2.2 billion) once the payments to India were settled.

An International Monetary Fund (IMF) delegation in November warned that the Maldives’ financial reserves “have been declining slowly, [and] now account for just one and a half months of imports, and could be more substantially pressured if major borrowings maturing in the next few months are not rolled over.”

Further pressure on reserves came from a ballooning public debt ratio, “which now stands at over 80 percent of GDP, and has helped to boost national imports, thus worsening dollar shortages in the economy and putting pressure on reserves,” the IMF warned.

Presenting the 2013 budget to parliament in late November, Jihad warned of “bitter consequences” should the spending trend continue.

His target budget deficit of 6.1 percent in 2013 takes into account a raft proposed revenue raising and cost cutting measures which would impact the tourism industry – such a proposed tourism GST increase to 15 percent – and require parliamentary approval.

Further modernisation of the airport – or even completion of the existing upgrade – is likely to require extensive outside assistance or further loans. The rusting foundations of GMR’s new terminal sits on 60 hectares of newly reclaimed land on the airport island, after the government ordered a halt to the development in August. Large sections of the old terminal remain boarded up for construction work, which the government’s ability to proceed with is in doubt.

Further modernisation of the airport is likely to depend on outside assistance. President’s Office Spokesperson Masood Imad told Indian newspaper The Hindu yesterday that after reclaiming the airport, the government would again float a tender for its modernisation “and get more parties in to take the work forward.”

“The tender will be floated by the Maldives government in a transparent manner and after consulting investors. The mistakes made during the float of the tender which has been cancelled will not be repeated,” Imad told the paper.

Environment Minister Dr Mariyam Shakeela has meanwhile separately appealed to China for financial and technical support, telling journalists from the Chinese government’s authorised web portal China.org.cn that the Maldives “needs funds for infrastructure building.”

“We are obviously in need of funds and technical assistance as we do not have the financial means, the technical know-how or the capacity to address these huge climate change issues,” said Mariyam, in an appeal for assistance with climate adaptation.

The government has dismissed speculation Chinese involvement in the development, however Minivan News has learned that senior Chinese military officials landed at the airport in the tense week leading up to the handover, even as India warned of “adverse consequences” should the government proceed with forceful eviction.

India’s reaction after the Singapore Supreme court ruling was muted. Ministry of External Affairs Spokesperson Syed Akbaruddin said the ministry was “studying” the judgement and that their lawyers “need to understand it”.

“There are two issues in the case – one the sovereign right of a nation and other the legality of the agreement, which was linked to compensation to GMR and its associates in Malaysia, he said the latter part has not been “affected or responded” in today’s judgement.

“These issues are not affected with the judgement or not responded to. Fulfilment of all legal process and requirement is what we want to see in this case and we hope that all relevant contracts and agreements would be adhered to and all legal process are carried through,” he said.

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Divers continue search for Chinese tourist missing from Maldives resort

Coastguard divers are trying to locate a Chinese tourist reported missing from the Bandos Island Resort and Spa property since Thursday (December 6).

Maldives National Defence Force (MNDF) Spokesperson Colonel Abdul Raheem said that a diving team was conducting further searches of the area surrounding the resort to try and locate the tourist, identified as a female Chinese national who had been staying at the resort.

When contacted by Minivan News today, a spokesperson for Bandos Island Resort and Spa said it would not be making any comments on the matter at present, asking to be contacted in 24 hours time.

“It is not possible for us to comment today, our manager is not on duty,” said a representative for the property’s marketing department said.

Police Spokesperson Sub-Inspector Hassan Haneef was not responding to calls from Minivan News at the time of press.

Boat collision

Details of the search operation were announced after a male tourist from Finland was killed last Sunday (December 2) when an express speedboat service to the island of Hulhumale’ collided with another vessel belonging to the Bandos Island Resort and Spa.  Nine local people were also injured in the collision.

The Honorary Consul of Finland in the Maldives confirmed this week that it was assisting the resort property in working to arrange repatriation of the tourist, while investigations by police and transport authorities continue into the matter.

Following the collision on Sunday, a spokesperson for the Maldives Transport and Contracting Company (MTCC) said it had temporarily suspended its express speedboat service between Hulhumale’ and Male’ while it reviewed guest safety procedures.

“We believe we need to do some work on safety,” a company spokesperson told Minivan News. “We will be working with transport authorities, the Maldives National Defence Force (MNDF) and the police on the matter and will resume the services after that.” Dhoni services will continue to run between Male’ and Hulhumale’ as normal, the MTCC added yesterday.

Danger awareness

Over the last 12 months, tourist deaths – usually while snorkelling – have been disproportionately higher among Chinese tourists, which now account for a majority of Maldives tourist arrivals even compared to traditional European markets.

Mohamed Ibrahim ‘Sim’ from the Maldives Association of Tourism Industry (MATI) previously told Minivan News that Chinese guests in particular needed to be made more aware of the dangers of snorkelling in the Maldives, “because it is a totally different environment than what they are used to.”

Back in October, police said that a 26 year-old male from China staying at Alif Dhaal Atoll Vakafaru resort was suspected to have died in a snorkelling accident at the property.

Meanwhile in January, two Chinese nationals on vacation at separate island resorts in the Maldives were found dead within 48 hours of each other.  Authorities said they suspected both incidents were the result of snorkelling accidents.

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“Maldives can do whatever it wants”: Chief Justice of Singapore

The Supreme Court in Singapore has overturned an injunction blocking the Maldivian government from voiding its concession agreement with GMR and evicting the airport developer by midnight tomorrow.

“The Maldives government has the power to do what it wants, including expropriating the airport,” declared Chief Justice of Singapore, Sundaresh Menon.

The Maldives appealed the stay order which was granted after cabinet on November 27 declared the country’s concession agreement with the developer ‘void ab initio’, or invalid from the outset, and gave the company seven days to hand over the airport to the state-owned Maldives Airports Company Limited (MACL).

The government rejected the injunction, with President Mohamed Waheed’s Special Advisor telling reporters: “I believe that the Singapore court interpreted the law wrong. We cannot wait for a hearing of the appeal. What I am saying is there is no damage to GMR but we face damages by not terminating the agreement.”

GMR dug in its heels, clinging to the injunction, with the backing of the Indian government, which urged the government to take “no arbitrary and coercive measures pending the outcome of the legal process underway.”

CEO of GMR Male International Airport, Andrew Harrison, told Minivan News on Thursday afternoon that it was “too early to say” whether the withdrawal of the injunction meant company was now obliged to hand the airport over to MACL before the deadline on Friday.

“We are waiting to review the full judgement, which is currently being written up. We’ve always been advocates of following the law. We will have a staff briefing tomorrow afternoon,” he said.

MACL meanwhile released two statements claiming that it had met with airlines operating at the airport and advised them that it would be taking over the airport from midnight at December 7. Details of the meeting were not provided.

MACL’s website remains inaccessible a week after it was targeted by Indian hackers, who replaced it with the slogan: “If you don’t know how to secure a website, can you run an Airport securely, MACL?”

GMR held a press briefing for journalists in Delhi yesterday.

Asked about whether GMR had felt the involvement of another country such as China in the development of the Male’ airport, the company’s CFO Sidharth Kapur said “I can’t say that for sure. But, looking at the political situation and political framework in Maldives, I can’t rule out anything.”

GMR had received no response from any attempt to communicate with President Mohamed Waheed, he said.

President’s Office Spokesperson Masood Imad meanwhile told Indian newspaper The Hindu today that after reclaiming the airport, the government would again float a tender for its modernisation “and get more parties in to take the work forward.”

“The tender will be floated by the Maldives government in a transparent manner and after consulting investors. The mistakes made during the float of the tender which has been cancelled will not be repeated,” Imad told the paper.

The Waheed government has previously accused the International Finance Corporation (IFC), a World Bank entity, of being “irresponsible” and “negligent” in advising the former government of President Mohamed Nasheed in the concession of INIA

The IFC has denied the accusations, stating that its advice was geared towards achieving the “objective of upgrading the airport and ensuring compliance with applicable international regulations” and providing the Maldives government “with the maximum possible revenue”.

“A competitive tender was organised with the objective of selecting a world-class, experienced airport operator, who would rehabilitate, develop, operate and maintain the airport,” said an IFC spokesperson, in September.

Environment Minister Dr Mariyam Shakeela has separately appealed to China for financial and technical support, telling journalists from the Chinese government’s authorised web portal China.org.cn that the Maldives “needs funds for infrastructure building.”

“We are obviously in need of funds and technical assistance as we do not have the financial means, the technical know-how or the capacity to address these huge climate change issues,” said Mariyam, in an appeal for assistance with climate adaptation.

Former President Mohamed Nasheed, under whose administration the concession agreement with GMR was signed, called on the government to reconsider its decision to take over the airport and “pull back from the brink and cease its counter-productive behaviour, which is damaging the nation’s economy and bilateral relations.”

Nasheed said the Maldives was “rapidly developing a reputation among foreign investors akin to Zimbabwe, where government might is right and contract law counts for nothing.”

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GMR disputes government’s claims to international media that it had agreed to vacate airport

Indian infrastructure giant GMR has said it “categorically refutes” claims made by the government to international media today that it had agreed to vacate Ibrahim Nasir International Airport (INIA).

The government yesterday dismissed an injunction on GMR’s seven day eviction notice granted by the High Court of Singapore, and vowed that the airport would be run by the state-owned Maldives Airport Company Limited (MACL) by December 7.

A Finance Ministry official said on condition of anonymity that GMR had agreed to vacate following “informal communication.”

“It’s unofficial. They are even selling off their items at a cheaper price. They have given 40-60 percent discounts. They are selling off whatever they can sell off from here including iron bars, concrete, and cement. So I think there won’t be any confrontation or any such nature. All the department heads and senior staff will start working for the Maldives Airports Company Limited MACL from December 7,” the official claimed. “Even though they maintain in public they are not going to vacate, they are going to vacate.”

President’s Office Spokesperson Masood Imad meanwhile told reporters that “Whatever the financial implications on their investments, we have already filed a case in Singapore court for arbitration. We will pay the compensation, what we have to pay.”

However CEO of GMR Male International Airport Limited (GMIAL), Andrew Harrison, said that while GMR had met with a delegation from the government at 11:45am this morning, “we did not agree nor state our willingness to hand over Male’ airport.”

Harrison told Minivan News that he had been advised by a Maldives National Defence Force (MNDF) Colonel at 11:03am that Defence Minister and Acting Transport Minister Mohamed Nazim wished to meet him personally.

“The meeting was attended by the Acting Transport Minister, the Chairman of the Maldives Civil Aviation Authority, our lawyer in the Maldives and three members of the MNDF,” Harrison said, in an emailed account of the meeting.

“The meeting was cordial and the Acting Transport Minister outlined the following: that MACL would be operating the airport from Saturday morning in line with the Government of Maldives communication to GMR-MAHB; that the Minister would like a smooth transition as the airport operations should not be affected or suffer in any way; that passengers should not be inconvenienced and therefore all activities including Duty Free would be allowed to continue as is.”

According to Harrison, Nazim informed GMR that “According to their legal advisors the injunction issued by Singapore High Court does not prevent them from taking over the airport and the injunction cannot be applied to a sovereign state.”

Nazim had furthermore proposed offering “100 percent employment in MACL to all staff currently working for GMIAL and an announcement to that effect made tomorrow by the MACL Board .The offer includes both local and foreign staff at their existing terms and conditions including salary,” Harrison stated.

“Our position, which I communicated to them, remains crystal clear. The Singapore High Court has issued an injunction which clearly prevents MACL or the Government of Maldives or any of its agents from taking any action that interferes with GMIAL operating the airport. The injunction clearly prevents them from taking the action outlined in their notice issued to us stating that the airport would be taken over at the end of the seven day period. We remain resolute in our position and there is no question of an offer being made and certainly no question of any alleged offer being accepted as we will simply not agree to our rights nor the injunction being undermined in any way.”

GMR’s lawyer had advised that the injunction was to be was to be honoured “as their representatives and the Attorney General [Azima Shukoor] were party to those proceedings and were present during the proceedings in the Singapore High Court.”

“Further to this we have issued a communication to their lawyers to confirm that their client (MACL/GoM) will not ignore the injunction and outlining the consequences as well as the disturbing media reports that they will ignore the injunction and take over the airport as planned,” Harrison stated.

Nazim had explained that “as he was not a legal person” he would arrange for a legal team to meet GMR’s representatives tomorrow, and pledged to “maintain dialogue”, Harrison said.

“We will always maintain dialogue but our legal position is very clear and we will not compromise on our legal position which is clearly supported by the injunction.”

Moreover, “any version of the meeting being described any differently to my response is categorically untrue and we maintain that we have been granted the right to continue operating the airport in line with the injunction. There is and has never been any change in our position.”

Harrison added that Nazim had also said that “no force used to take over the airport” and that “media reports that the MNDF would take over the airport are untrue.”

Claims that the company was discounting were true – “in the duty free shop”.

“We have a 40 percent sale in duty free because we are trying to minimise our stock holding,” said Harrison. “It is delighting passengers. But I can categorically state we have no intention of going anywhere.”

Indian industry groups back GMR

The 400,000-member Associated Chambers of Commerce and Industry of India (ASSOCHAM) has meanwhile issued a statement today in support of GMR, warning that “the attitude of Male’ Government, despite the rulings of Singapore High Court, will shake the confidence of the investors and will jeopardise the spirit behind the cooperation of the SAARC nations.”

The industry group appealed to the government to respecting the Singapore judgement, and said it “conveys its displeasure against any unilateral termination of economic agreements, that will be determent to the growth of the nations and might even sow seeds of suspicion amongst the potential investors in all times to come.”

A second industry group, the Confederation of Indian Industry (CII), also issued a statement in support of GMR.

“It is extremely important for all the concerned parties to respect the sanctity of the concession agreement and abide by the provisions provided therein to resolve any dispute within the stipulated legal framework”, said the CII’s Director General, Chandrajit Banerjee.

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Male’ City Council accuses government of sabotaging Tatva Global waste management project

The government has announced is it in the process of renegotiating a waste management contract for the Male’ area with India-based Tatva Global Renewable Energy – leading to criticism by the opposition-dominated Male’ City Council (MCC) that the state is trying to sabotage the agreement for political gain.

Former President Mohamed Nasheed’s administration signed the original waste management agreement with Tatva in May 2011 in a deal that was supposed to have generated power from recycling waste. The scheme was also said to be part of attempts to improve the overall standards of waste management in Male’ and the nearby “garbage island”, Thilafushi.

The deal, like the airport development agreement with India-based GMR declared void by the government this week, was been backed by International Finance Corporation (IFC), an affiliate organisation of the World Bank, according to the Inter Press Service news agency.

However parts of the agreement were ordered halted by the country’s Anti-Corruption Commission (ACC) in August this year over alleged concerns about the contract, which was also signed under the former government.

The ACC received concerns that the project would lead to an anticipated loss of MVR 1 billion (US$64.8 million) in government finances over a 20 year operating period, according to local news service Haveeru.

ACC President Hassan Luthfee had phone switched off at the time of going to press.

In correspondence sent to Minivan News this week, Dr Mariyam Shakeela, who has served as Environment Minister for the last few months and was most recently appointed acting Human Rights Minister, announced that a previous contract agreed with Tatva was expected to be replaced with a “mutually beneficial” agreement.

“Provided they perform within the time frame given, the contract will remain with Tatva,” she said in response to whether the company would retain its role on the waste management project.

Dr Shakeela, who did not respond to a question on the nature of the government’s concerns with the previous contract, said the time frame for the deal was “under negotiation”.

“[The] whole agreement is being formulated,” she added.

A spokesperson for Tatva Global Renewable Energy was not responding to calls from Minivan News at time of press.

MCC criticism

However, the MCC has claimed that following a visit of senior officials from Tatva Global Renewable Energy between November 18 to November 20, a failure by the government to involve its councillors in the process and ongoing delays to commencing the project had let it to conclude that the deal would be eventually cancelled. The MCC said it expected the project to eventually be cancelled, despite increasing problems with waste management in the capital.

MCC councillor Mohamed Abdul Kareem told Minivan News that he had been informed senior Tatva executives had been invited to the Maldives for several days earlier this month to meet with ministers and stakeholders involved in the energy project.

“However, I don’t know what the discussions were focused on. Many groups were there; the Finance Ministry, other government departments, the Attorney General’s Office and the State Electricity Company (STELCO) were all there,” he said.

However, Kareem questioned why the MCC – as a major stakeholder in its own waste management project – had also not been invited to the discussions to express its concerns over the need for the waste management project.

“The issue has been continually delayed and the waste management problem is getting worse, while we don’t have the budget to meet our waste management needs,” he claimed.

Kareem alleged that while the government was providing small amounts of funding for waste management, he believed attempts were purposely being made to exacerbate the capital’s refuse problems in order to undermine the municipal council’s work. Kareem added that he was presently consulting lawyers over where the MCC stood on the waste management project.

“We don’t have enough budget to collect the waste, meanwhile the collection centres in Male’ are full and waste is openly being burnt on Thilafushi,” he claimed. “I think this is a game [for the government], I am certain they will cancel this contract.”

Kareem claimed that with an estimated 150,000 inhabitants in Male’ each generating a kilogram of waste per day on average, managing the capital’s waste management was the largest logistical operations in the entire country on a daily basis.

“We are dealing with 150,00 kg of waste everyday, we don’t have efficient enough operations for this. We don’t have enough boat fuel and the excavators we use are 20 to 30 years old. “[Wednesday] even, the starter motor failed on one of these,” he said.

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