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 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.


38 thoughts on “Government takes over airport, evicts GMR”

  1. "It is our pin and we have every right to pull it out of this grenade. The itch in our backside needs immediate relief. We shall use this pin to relieve ourselves of the itch, aka MDP. We understand the consequences of pulling out the pin from a grenade - thank you very much Axis Bank, GMR and the Govt. of India. We shall not negotiate our sovereignty over this pin, the party at the Artificial Beach cannot wait any longer."

    With utmost arrogance,

    The Govt. Maldives
    On behalf of a mid level Chinese communist party bureaucrat

    PS: India, if you don't buy us a diamond ring worth $25million, the engagement is off. We will marry China instead.

  2. There is a new Sheriff in town. All crooks better take heed and repent. Or just leave town immediately.

    The mission is to clean up the town and kick out all corrupt crooks. Keep it up!

    Congratulations Maldives!

  3. My friend Indira......who is an evil bitch and you don't want to mess with her......says we should send out an aircraft carrier and send all of you true believers to Jahannum......and give you the holy martydom you crave.
    I say we should sever all relations with a backward country with whom we have NOTHING in commom and which has no concept of professional ethics, contractual obligations or how to conduct international business. Instead, we should:
    Stop all aid and soft loans
    Shut down all air links
    Stop the export of medicines, building materials and foodstuffs
    Impose the same draconian visa restrictions that apply to Pakistanis (your sunni brothers)
    Pack all Maldivians in India back to their primitive little atolls
    Recall all Indian doctors and teachers
    You should refloat the tenders for the airport development......if your bankrupt country can somehow beg or borrow the funds......but don't expect the new investors to rush forward.
    Indira says to remind you that the Chinese love their pork......and you should get ready to import tons of the stuff for your new friends.

  4. Good Riddance!!! Congrats sheikh Imran and adhaalath Next is the peoples majilis Forward march!!!!!!!

  5. Given the statements of key figures of Maldives GVT, GMR will be fully compensated as per the legal and arbitration authorities’ rulings. According to recent reports in various news papers,officials from Indian as well as Maldivian Government believe, the negative impression that GMR executives might have over the sudden eviction of GMR will not reflect on our bilateral relations.

    Hope the GMR has learnt a lesson here not to play politics, in the name of business, but stay purely commercial.

    May Allah bless this nation forever. Aameen.

  6. GMR signed the deal after removing the appointed board of directors of MACL by nasheed who refuse to sign and Nasheed again appointed a new board who signed the deal with in two hours of appointment. The fees were increased 50% by MACL few days before the deal.

    GMR was disqualified from pre-qualification and then there came a consortium out of blue GMR-Malaysian Airports.

    about the ADC GMR can take ADC for 25 years and when we see other airports like Delhi they are not allowed. the Auditor General of India has said the deal was not fair in Delhi airport.(see auditor general report, google it)

    Sri lanka does not charge any ADC or ADF, and the airport who charge this is charging after they have finish the construction.

    All GMR airports are joint venture either govt of india or in turkey case a turkey company. but maldives airport case they are the sole owner.

    Maldives and India are always like brothers, Zaki a cold war diplomat, one of the corrupt official in Gayooms administration is trying his best to break it, but it won't happen.

    GMR's shareholders to question there directors, they signed the deal knowing everything. Zaki once a corrupt official always will be so. MDP wake-up!!!

  7. GMR has the monopoly in this area of maldives to operate international air port as per the contract. is this called a free economy? say if gasim want to develop the airport which he has developed as a international one his rights are taken off, this is like a communist economy. tell u that Maamigili airport is within the radius of IATA distance, which if wanted can be turned into an international airport. the question of flights to that airport is a difference scenario.

    The GMR deal is filthy corrupt.

  8. Actually the damn thing is a blessing in disguise for GMR ...rather than putting up with a sore ridden, whining and ungrateful lot, they can go elsewhere and prosper.

  9. WTF!!!!Our mistake. we should have let the LTTE to takeover this 'cheat' nation.Myself from Trivandrum India can see 100s of Maldiveians coming here for medical treatment.Govt. of India should stop giving visas.Let them go & enjoy the hospitality of Chinese & Pakistani terrorists.

  10. GMR never won the bid and they were disqualified in the first round itself. They were given airport because they gave huge amount of money to Anni and his associates.

    Don't talk about winning the bid by GMR. No bid had ever win a part which were disqualified except under MDP ?

    The removal of GMR had nothing to do with India and Indian companies. They were removed because the contract was down outside the constitutional rights.
    Whole contract was high fraud.

    SBI , Taj Group and Tata is doing extremely well in this country and they are helping the economy for mutual interest and people are not bothered about them and people do not go on the road asking them to leave.

    If one need to weigh things they need to weight things in the same scale not one Kg and one in meter.

  11. Indians should have learned a lesson now its time to change their policies and tactics. growing external influences and corruption in the maldives might one day be a threat to India and it might be late if necessary actions and policies are not put in place immediately

  12. Corruption in GMR deal means they have to go and learn a lesson from it, but corruption in Nexbis deal means nothing and the deal continues....we can see why GMR really had to go..because nobody from this government benefited from the corruption. Well if only GMR had given some money to Waheed, and Imran and a few others who were protecting national interest and Islam eh...well surely this will be taken care of in the next deal.

  13. @A. Ahmed

    No. We're not footing the bills of your idiocy. Pay it yourself.

  14. Its time sane Maldivains to reflect on what Maldives diplomats says be careful of the lies they tell the public.

    Dr. Shaheed and Farahanz F, former SAARC General Zaki has all been giving doomsday news to Maldives public about GMR contract cancellation. These 'eminent, learned and most noble' Male diplomats views range from the apocalyptic consequences to Maldivains islanders if GMR is cancelled. These include
    - possible invasion by Indian army to Maldives (Zaki)
    - violation of Vienna Convention (which Dr. Shaheed posits in tweets, even when some one has diarrhea)
    - permanent loss of all investments in Maldives and investor confidence overnight
    - Dangers of Geopolitical move towards China and countries bordering N.Korea
    - implication of regional peace, Kashmir conflict and Lashar Taliban if GMR is evicted

    If you read the tweets from these 'dip low mats' average Maldivains island people get the sense that the entire world peace hinges of keeping GMR running the Maldives Government.

  15. now that gmr has gone we need our bloody salaries soon. Wondering if we can go begging to the indian govt. as we have been doing for dacades...but this time, got a bad feeling.hope the food subsidies and supplies are not cut off from indian govt.i think now the indian expats may be hesitant to work for maldives....will try to coax chinese or pakistanis to work for us.

  16. @MissIndia NewDelhi

    Don't forget to recall the 30,000+ non-professional workers working in Maldvies

  17. India is considered the big brother to all the Saarc nations except Pakistan and known to have bullied the small nations in the past and present6 too. Like how they created a monster in Sri Lanka to destablize Sri Lanka, how they planned the breaking up of Pakistan and there covert operations in Bangladesh,Nepal and Butan. I am very proud to be a Maldivian today because we did not bow down to so called mighty India and we stood our ground against the so called giant in the region and told them somewhat sternly enough is enough and we are not your slaves and would do anything which is right by our citizens. This is like Daawood and Golaith. We shall overcome any difficulty if ve have to by standing by our principals and telling India to go to hell if they try to intimidate us.

  18. Only a handful thought that the Government would be able to do this. So many feared for Indian Government's reprisal and warned of doom.

    Look at the present. Maldives India friendship and cooperation will not only continue. But it will thrive. Maldives will always welcome Indian companies to do business in the Maldives.

    Let us get rid of corruption and dubious under table deals. Let there be fair and transparent process in awarding major government contracts.

    Let there be broad support for major infrastructure privatization programs and ensure that they are win-win.

    Next we should not only clean up the Majlis but also the Judiciary.

  19. Bribery works here. This deal collapsed because there was none.

  20. Getting rid of GMR was a calculated move by the government. GMR got the airport agreement because they promised to finance MDP, whos key figures like Ibrahim Hussain Zaki and Razee got kickbacks out of the deal. This is common knowledge now, and no one would dispute that Zaki has a notorious reputation for this.

    GMR is not the only company in India who has been accused of corruption in the past. Under Manmohan Singh's premiership, senior officials, chief ministers and cabinet ministers has been facing numerous corruption charges.

    Just look at the '2G Sepctrum' telecoms scandal this year, the Commonwealth Games in 2010, the Mining scandal in 2011 - the list goes on. The corruption in India is an huge systematic problem facing India and GMR is no exception when they exported those 'norms' to countries like the Maldives when they came in.

    India probably recognizes that there was a corruption scandal involved in this controversy with key Nasheed aides, and understandably will not let the GMR issue jeopardize bilateral ties. I would imagine that the strategic, economic and cultural ties run much deeper than this between the two sides. India would also be careful not to push the Maldives too far into Chinese hands, its a delicate balance.

    If you look at Chinese companies in Sri Lanka, and their role in infrastructure development, you could probably understand why India would be weary of punishing the Maldives too much.

    As for FDIs, there are a number of foreign companies operating in the Maldives for a number of years-way before Nasheed's time even. They have not faced any problems and operate purely on a commercial basis.

  21. Thives occupying GMRs Airport.

    Baghee Watheed and co needs a huge commission by rebidding the Airport, the most valued asset in Maldives.

    How much commission you expecting Baghees????

    Dhivehingre Airport My @ss

  22. Well done by the Government. You have shown that you are NOT a bunch of idiots who were in MDP government.

    Proud of you Pre Waheed and Nazim. Also you make a good pair for 2013 election.

  23. im an indian citizen and dont understand this needless attention on this matter. from my A was in power and gave the contract to GMR after a worldbank/IFC supervised tender process. now party B is in power and they may award various contracts to various parties. then party A or party C will come to power and annul contracts of previous govts. where does this end? in my opinion the citizens of maldives are being taken for a ride and the only ones gaining are the political parties and the biggest gainer is GMR financially...however strategically they may be a loser in the long term. sadly this is pure politics and my heart goes out to the maldivians....

  24. Eviction of GMR would boost investor confidence in maldives as it gives the good signal to foreign investors that Maldives does not tolerate bribery.

    GMR eviction is a moment to reflect on the lies of MDP who are living in a reality bubble.

    GMR serves as a basic economics course in privatization for Ali Shiyam, Mahmood Razee, Inaz, Ali Hashim. Hope the Maldivains doesn't have to pay for to learn this way ever again.

  25. Now MDP thugs ( not all MDP members) will start the propaganda of going rebidding ? But i doubt that the government will do that.

    MDP need to get independent from Anni and his associates . Once MDP is free , then only the party have any political future .

    Anni is the biggest threat to our democracy in the country and this guy need to step down for us to get the real taste of our democracy.

    MACL is required to have proper board and proper management team to manage the airport. Current board is not possible to manage the airport .

    MACL need to bring foreign expertise to the company and appoint a CEO with proper experience with the correct energy to drive the company .

  26. It does not appear that GMR ever handed over the management and their investment at the airport to anyone.
    Instead, it does seem are obeying court orders.
    CEO appointed by GMR to manage their investment in the Maldives, was never seen at the ceremony held at 00 hrs in Male' and a firework display did not take place due to better display by mother nature!
    Everything said and done was by the Defence Minister who at a very appropriate time is seen acting as Minister of Traport.
    It does seem he is made the stool pigeon, or is working with the interest of taking a fair share of the management a fair share of all constructions to his father's Rasheed Carpentry.
    It is very much spoken that already 2 Thai and 3 Singaporeans are already being interviewed for managing purposes!
    All well planned and prearranged!

  27. GRM nationalisation may have strange parallels with Suez Canal nationalisation of 1950s.

    The fate of the British empire was officially sealed when Gamal Abdul Nasir nationalized suez. He was successful in playing the US against the Soviet Union to oust the Brits.

    Similarly with taking over GMR, and thus weakening MDPs pay master, Dr. Waheed may have inadvertently reduced the influence of the British Conservative party's influence in Mordis politics.

    Quite extraordinary!!

  28. Well whadya know ! Life seems to be going on as usual, after the eviction of GMR.

    From the rantings of MDP, it seemed yesterday that all hell would break loose. Zaki was ranting about a possible Indian invasion, Hamidh Abdul Qafoor was blabbering about the collapse of relations with India, and a diplomatic crisis ! Even Reeko Moosa Manik was hollering about toppling the Govt the next day if Govt dared to go ahead with GMR eviction !

    However, we see nothing of the sort has happened ! Two days have gone by, and life seems to be going on as normal ! Indian foreign minister has confirmed that relations with Maldives should not be unaffected by the move, quashing any hopes that Hamidh and other MDP politicians had that India might act more sternly ( WE HAD TO HOPE FOR A MILITARY ACTION !). In spite of all the efforts that Zaki and MDP undertook trying to provoke the Indian govts officials against Maldives, NOTHING HAPPENED ! BLIMEY !
    (Salman Khurshidh, India's foreign minister confirms that Indo-Maldives bilateral relations should not be hurt by GMR deal being cancelled).

    Even the employees of GMR who went live on RaajeTV, shouting about never leaving GMR,(WE'LL STAND OUR GROUND NO MATTER WHAT ! ) and what not, they seem to have reservedly (and quite angrily may i add) resided to their fate. The employees who bad-mouthed Airports Company live on RaajeTV, now have meekly started shifting to their all-too-evil airports company, which they had bad-mouthed a handful in the past week.

    Where is the courage people !

    Why had these rootin tootin (MDP activists ?) employees who were ranting to stand with GMR till the last breath, thrown away their arms and accepted defeat by meekly coming out to work for Airports company ?
    Why if it had been me appearing live on television, i would have rather resigned rather than leave my precious GMR !
    Course, this also exposes the two-facedness of the employees who went live on RaajeTV ! Bad mouth one-week, next week go to the company which you bad-mouthed and demand that they give you a job ! Where is your dignity people !

    In the end, What does this all prove ?

    Why that MDP is nothing but a joke, and it's so-called politicians such as Zaki holler nothing but garbage, and that they will go to any lenghts to sensationalize any news and event for their political gain.

    Maldivians should think twice before believing the rantings of MDP politicians. History has now proven that what they preach is nothing but utter nonsense, and fabricated stories that have no truth in them. Look at Zaki's claim of the Indian Military arriving ? Did the military arrive ? Did a diplomatic crisis arise with India ? Was the GOvt toppled the next day ? Why no sir-eee. Thoses were just ranting of a few political lunatics who will spin any yarn just to get some media attention. Morons the lot of em.

  29. hi
    we r from india & r planing to visit maldives for a vacation.with the GMR issue & safety of indians, is it safe to go or should we cancel our booking. would loose a lot of money in that case.
    any help would be great

  30. sanjoy. We are not against Indian and we are against with GMR and MDP corrupt deal .

    You are well aware that there is case going on India against GMR in your own country. GMR is well known for tax fraud and corrupt deals.

    GMR should have been stay in this country if they were willing to negotiate the contract to come to fair terms for both side.

    But they were fooled by Anni and his associates and these guys took huge money from GMR by promising that the government can not terminate the contract as long as these guys are able to breath.

    There are other indian companies who are doing business for many years and non of the Maldivian had any issue with them.

    We know those indian company are doing a fair business and they are not robbing . Taj group and Tata group and SBI to name a few are here in this country for years . In fact they play a vital role in our economic development .

  31. thanks mody, you are very reassuring and i am not cancelling my trip.

    also i am nobody to poke my nose into other peoples affairs or sermonize, but i am going to agree with vijay.
    why because this thing has happened in my state of west bengal. when CPM was in power they gave land to Tata to build the Nano factory and they (tata) invested money. then after elections another party comes to power and kicks tata's out. the land which they had taken has half the construction done and now cannot be used for farming or anything else and half the farmers are in a soup because they didn't get any compensation . and what has happened for the last 3 years there has been no investment in the state. we are in fact one of the most educated yet most backward state in India. and why should investors come if they get a better deal elsewhere. and what makes me even more sad is that i voted for the second govt. serves me right. i just hope you guys don't fall for this sort political crap and brinkmanship.
    wish you all the best

  32. @Sanjoy

    If your Kerela state needs investment, we can do it from Maldives. Even Qasim can help India

    Any airports available there for investing?

  33. it said "my state of west bengal" not kerala, atleast please read properly and yes we need investments not statements

  34. @Hussain
    India considers itself big brother in South Asia - because it has more people, more army, more money, better technology and given all the level of corruption a very stable democracy and our army and judiciary plays its own role, don't meddle in running government. For your information - the kind of relations we have with Nepal and Bhutan are unrivalled in world - people of these two countries are legally allowed to live and work (including govt. jobs) in India and vice versa. India also happens to be one of biggest investor in Bangladesh and Sri Lanka - despite all ups and down. China (with all its enmity is our biggest trading partner) and guess what Pakistan too these days is seeking trade relations to save its economy. You know - in present world money matters more than so called "national pride" etc. Indians have learned it a very diffcult way - remaining under pressures and barriers for most of our independent years. Guess, it is time for Maldives to learn it too.

  35. @Virenda
    Comments most appreciated. It is rare to see any sanity, reason or objectivity in comments posted here.


  37. India tightens visa rules for Maldivians -------------------------------------------


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