Day: November 21, 2014

GMR lodges US$803million claim, pleads for award of further damages for loss of reputation

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

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Yameen pledges to end violent crime at ‘Successful 365 Days’ rally

With additional reporting by Ahmed Naish and Ismail Humaam Hamid

The Progressive Party of Maldives will rebuild a devastated nation through job opportunities for the youth and a crackdown on violent crime, said President Abdulla Yameen while celebrating one year in office.

Yameen urged young people to take advantage of the opportunities that would be created by growing tourism and large scale foreign-funded infrastructure projects, while pledging to bring peace and security to the nation.

“I want to say tonight as well in your presence, this government will have no mercy at all for those who slaughter Maldivian citizens with no mercy,” said Yameen at the ‘Successful 365 Days’ event held in Male’ this evening.

He pledged to implement the death penalty – reintroduced under his government, for the sake of human rights and dignity.

“Saving the Maldives from these big atrocities is the biggest aim of this government,” he said, stating that Maldivians by nature sought peace and stability.

Yameen said that proposed changes to legislation would remove violent crime which has blighted the country in recent months, suggesting the framers of the 2008 constitution wanted to create unrest and anarchy.

An estimated 3000 people attended the event at the carnival ground area to hear cabinet members and party colleagues detail the achievements of President Yameen’s anniversary.

While Islamic Minister Dr Mohamed Shaheem Ali Saeed said Yameen had united the nation, Speaker of the People’s Majlis Abdulla Maseeh Mohamed launched a book detailing the administration’s accomplishments.

Speaking earlier in the evening President’s Office Undersecretary Dr Hussain Faiz listed the achievements of the cabinet’s social council, which he said included a doctor for each island, opening 46 pharmacies, and introducing sea ambulance services in six atolls.

Faiz also noted that the government had introduced the unlimited Aasandha healthcare scheme for persons with chronic illnesses, as well as raising the old age pension to MVR5000.

Pledges to provide unlimited healthcare to all citizens as well as a doctor for every family were two of the administration’s aims for an ambitious 100 day programme twelve months ago, while nationwide sea ambulances had been promised within the first year.

Faiz also noted the feasibility studies carried out into an Islamic University in the Maldives, while saying that the role of Islam and Quran had been expanded in the new national curriculum.

Discussing the government’s record on development and the economy, Minister of Fisheries and Agriculture Dr Mohamed Shainee noted that the country’s dollar shortage had been alleviated, while MVR68 million worth of loans were issued.

Shainee claimed that, in addition to 1,700 new businesses being registered, and new resorts being put up for bidding, 19 foreign investors had registered a commitment of investing over US$600 million.

The government has introduced legislation for special economic zones – with a minimum investment of US$150 million – in an attempt to draw in new developers, though the only significant agreement signed as yet has been the Chinese deal to begin redevelopment of Ibrahim Nasir International Airport.

The fisheries minister suggested that President Yameen’s background as an economist had contributed to the administration achieving the equivalent of six year’s work in one.



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President Yameen’s anniversary – The Year in Review

Analysis: President Yameen’s first year – Towards good governance?

MDP condemns insecurity as PPM celebrates peace and order

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