The government of Maldives is in talks with the Japan Bank for International Cooperation (JBIC) and China Exim Bank to secure a US$600 million for airport development.
Tourism Minister Ahmed Adeeb said the government is seeking US$200 million from JBIC and US$400 million from China’s Exim Bank to develop a terminal and runway respectively.
Sinagpore’s Changi Airport Group will be hired as consultants as they are better qualified to work with Chinese and Japanese contractors, he added.
The government is in the process of finalising an agreement with Changi, he said.
Speaking to the press on Tuesday, Adeeb said he does not expect a Singaporean tribunal’s ruling ordering the government to pay damages to former airport developer GMR Infrastructure for wrongful termination to affect the government’s new plans.
In abruptly terminating the contract, the government had chosen to protect the country’s multibillion-dollar tourism sector, Adeeb said. He claimed major airlines had threatened to cease operations in the Maldives following the GMR takeover – a move that may have led to collapse of tourism.
Compensation
Adeeb has dismissed opposition fears of an imminent sovereign debt crisis if forced to pay GMR’s initial claim of US$ 1.4 billion, repeatedly stating the government has the capacity to pay compensation.
“God willing, our airport will be developed. Our economy will grow with the special economic zone bill, and our government will become rich, we will overcome our budget deficit and god willing we will be able to pay any amount we have to,” he said.
Adeeb also said the arbitration tribunal had ruled out the US$1.4 billion claim as a large percentage of the claim is business opportunity losses.
The exact amount of compensation is to be set in a second phase of arbitration and will factor in concession fees and the amount GMR invested in INIA.
President Abdulla Yameen has previously predicted compensation to be approximately US$300 million, while former Attorney General Azima Shakoor in 2012 said the figure may be as high as US$700 million.
The World Bank in December said GMR’s compensation will place severe pressure on the country’s already “critically low” reserves.
As of April 2014, the Maldives’ gross foreign reserve stood at US$434.8 million, while total outstanding debt at the end of 2013 stood at US$793.6 million dollars.
GMR or tourism?
The concession agreement was “lopsided,” “biased” and negatively affected airline operations in the Maldives, Adeeb said.
“[I]t was either tourism or GMR contract. Only one of them would survive in the Maldives. Airlines were complaining, some airlines were moving out – as you know, for big airlines like Qatar, it is no big deal for them to stop operations here. For them, this is a very small market. If airlines stop operations, a country’s tourism will go bankrupt. We have seen the decline to tourism in Seychelles and Mauritius. We had to take action,” he said.
“IATA research shows seat capacity from Europe decreased from 2010 – 2012, and it was not affordable for charter airlines to fly to the Maldives. They were increasing fuel prices, by week, by month, for big scheduled airlines, without considering world prices, because they had a monopoly. Due to the agreement, there was nothing the government could do,” he added.
However, a 2013 Auditor General report presented a “mixed picture”, stating only Sri Lankan airlines definitively ceased refueling due to increased price of fuel.
Adeeb said he believed airport infrastructure are tourism investments, and pledged to integrate tourism and regional airport development.
“We want responsible investors, not just investors,” he said, adding that the government will sue former government officials who have caused losses to the government through lopsided business contracts.
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“We want responsible investors, not just investors,” he said, adding that the government will sue former government officials who have caused losses to the government through lopsided business contracts.
Haha, this is just too funny. So Arthur Brothers fall into the category of responsible investors? And it's going to be interesting the dirt that comes out when these people start suing one another for lopsided contracts and side benefits from contracts eh.
indeed the loan needed now is not for airport development as said ,but for compensating the compensation amount to GMR which arises
MDP will find hard to believe that airport can be developed without giving it away to people like GMR for 25 years.
When loan is secured and development starts, Nasheed will come out from his own hole and will tell that it is going to take 100 years to develop and Yameen is juts trying to show off ?
We do not need GMR and neither we will entertain such corrupt investors to be partner of Maldives. We have the capacity to manage and develop the airport.
We do not want to allow GMR to take 5 billion from our airport and then leave the country after 25 years and ruin the airport at our cost.
Nasheed must be sued for giving the airport for free and here few basic points.
1. GMR had only spend aprox 30 million dollars from thier pocket to pay advance money and balance was paid through the operational cash-flow from airport.
2. Fuel Stock worth over 50 million was given with a handshake.
3. Airport Passenger handling system which was bought by IAS , worth 5 million was given with a handshake . Not a single cent was charged from GMR and neither was allowed to take back island aviation .
4. Contract was signed aftre dissolving the existing boar, and new board was forced to sign less than 36 hrs from the appointment of the new board.
5. The board of directors and chairman refused to award the contract to GMR initially and that is why Nasheed dissolved that board and appointed new board ? Does not this mean corruption and Nasheed must be charged to this.
Hero you are right, if there is corruption then everyone involved must be charged and made to pay the price. BUT my concern is why you are unable to make the same call for the corrupt leaders in PPM. Why only Nasheed and MDP?
mr.president yameen. pl give air port and naval base to china. there very responsible honest, not like others to take 50 years to build small building. also lots of problems. only china we can live with peace of mind.
So the govt. is expecting a penalty of USD 600million for GMR fiasco??
If you need to borrow money to pay the compensation to GMR.....you must be BANKRUPT, PENNILESS, DESTITUTE, HARD UP and FLAT BROKE.....also you need to borrow a lot more.
I can see your taxes going UP for the next fifty years.
Now is a good time to go on jihad to Iraq......quick, before the compensation assessors arrive.
@MissIndia.
When GMR was removed from Airport, India demanded to pay 100 million immediately and we did pay that money also.
Don't think that we can not pay what ever the money that need to pay to GMR. Few People like you think that we can not manage our country. But you are wrong and our standard of living is 100 times better than your even today.
Still 60% of your population lives under poverty line and its best that you focus on improving your own country before you trying to involved in Maldives.
GMR will never come back and Maldives will never pay that bloody 1 billion. Lets see how this new airport looks like and is operated. I am sure it will be better dhan indian ones...Oh well kinda smelly in the indian airports right@ miss india
I suggest you pompous and delusional islanders do a search on Google Images and Youtube for:
New airport terminal New Delhi (cost 3.1 billion dollars)
New airport terminal Mumbai (cost 2.1 billion dollars)
New airport terminal Bangalore
New airport terminal Hyderabad
New Delhi Metro
Mumbai Monorail
I am sure the airports in Harare, Mogadishu and Pyongyang are better than the eyesore you have the audacity to call an International Airport.
By the way, how are the preparations for your jihad in Iraq?
@MissIndia.
How investigation against GMR shareholders in swiss going ?
How are you going to stop daily raping ?
How are you going to provide food for 53% of the population who does not have excess to daily a meal, clean water and excess to education ?
I am sure you are making efforts to improve them and hope and wish you good luck .
Once you are done then please start to talk some non sense here .
It seems that the government will sell its soul to China... A night mare for the country,
ha ha ha in poverty Indian airports rats are running freely among passengers such a KUWALIDY ...maintance and investment...