The government’s decision to offer 15 percent of its shareholdings in local telecom giant Dhiraagu for sale to the general public is intended to benefit foreign parties, the incipient Progressive Party of Maldives (PPM) alleged today.
At a press conference this afternoon, PPM Spokesperson MP Ahmed Mahlouf claimed that the party has learned through “inside information” that the government planned to sell a large portion of the shares up for sale through the Initial Public Offering (IPO) to British company Cable & Wireless, which currently owns the majority stake of Dhiraagu.
The government sold seven percent of its shareholding in Dhiraagu to Cable & Wireless in 2009 for US$40 million.
“While claiming to sell 15 percent to Maldivian citizens what they’re doing now is selling shares to Cable & Wireless again,” Mahlouf said. “We received inside information long ago that a large part of that 15 percent is going to be bought by Cable & Wireless.”
The MP for Galolhu South expressed concern with the shares being open for purchase by both foreigners and international companies.
He added that the Maldivian people would have to face “the bitter consequences” of the Maldivian Democratic Party (MDP) government “selling off state assets built up by the former government through a lot of hard work.”
Economic Development Minister Mahmoud Razi however dismissed the allegations as completely unfounded.
“Why would we register with the CMDA (capital market development authority) and go for an international public offering if we wanted to do that?” he asked. “We’ve already sold them the majority stake.”
If the government wished to sell shares to C&W, he added, there would be “no need of a charade.”
In a press release issued after a ceremony to launch the IPO this week, Dhiraagu stated that 11,400,000 ordinary shares having a nominal value of Rf2.50 each at the offer price of Rf80 per share would be made available to the public.
The subscription period will open on October 25 and close on November 30. Formed in 1988 as a joint venture between the government and Cable & Wireless, Dhiraagu has since invested US$155 million in developing its network and operations within the Maldives. The company employs more than 600 people, 99 per cent of whom are Maldivians.
Speaking at the IPO launching ceremony Tuesday night after releasing the Dhiraagu prospectus, President Mohamed Nasheed said the government’s aim was to divest its remaining 33 percent to the public at a later date.
The MDP government’s policy was to ensure that the government would no longer be involved in business, said Nasheed, reiterating the government’s commitment to free market principles and economic liberalisation.
“The government is very much certain that profits increase manifold when the government is not involved [in doing business],” he said. “This became most clear when the airport was privatised. Did you know that before [Indian infrastructure giant] GMR took over [management of] the airport, in the year that the government received the highest amount from the airport company to the state budget, it was Rf100 million (US$6.4 million). Usually it is Rf75 million (US$4.8 million). This year the government will receive Rf600 million (US$39 million).”