Independent MP Mohamed Nasheed has said the government is circumventing the Civil Court’s ruling against a US$25 Airport Development Charge (ADC) by agreeing to deduct the anticipated revenue of US$25 million from GMR’s concession fee.
Nasheed also contends that the government has not breached its contract with GMR, but rather that the contract was breached by outside forces.
The minority Opposition Dhivehi Quamee Party (DQP) has also announced that it will investigate the recent amendment to the government’s contract.
GMR was set to collect US$25 from all passengers departing on international flights starting January 1, 2012. The expected revenue was to cover certain costs for the development of Male’s Ibrahim Nasir International Airport (INIA).
According to Nasheed, any agreement between the government and GMR will not undo the Civil Court’s ruling against the ADC. He argued that the court ruling rendered the clause allowing for an ADC null and void.
“That’s the only decision that interprets or explains the local law at the moment, and it has not been overturned, it has not been struck down by a superior court, therefore that is the position. You can’t circumvent it by deducting receivables from GMR,” said Nasheed.
“Now, the only viable option for the government would be to amend the legislation, allow for the GMR or any other party to collect ADCs or these kind of taxes in future, and then bring the GMR issue within the legislation as an amendment,” he said, adding that an amendment to the law would protect the government from incurring losses to ensure a base line of revenue for GMR.
A related bill is currently awaiting Parliamentary review in March. Nasheed understood that the ADC would be collected by the government only three times per year, yet “it is only January 10 and already the government is trying to make this agreement and circumvent the court decision.”
Meanwhile, the government is also awaiting the High Court’s verdict on the Civil Court case, which was appealed in December. Nasheed said a contract cannot be revised while it is before a court.
Previously, members of the government including President Mohamed Nasheed have expressed firm support for the contract with GMR. Speaking at the groundbreaking ceremony of a new terminal construction project at INIA, the President said the Maldives was “200 percent” behind the contract, while Press Secretary Mohamed Zuhair yesterday stated, “it should be a matter of pride and joy for any Maldivian to help with the development of their airport.”
DQP previously voiced strong opposition to the deal with GMR, filing a case at the Civil Court and releasing a booklet entitled “Handing the Airport to GMR: The beginning of slavery.”
In MP Nasheed’s opinion, however, the government has allowed itself to be bullied into a compromise of terms.
The agreement implies that the government has taken responsibility for the ADC as stipulated in the original contract with GMR. If the ADC is charged for the duration of the 25-year contract, the government could potentially be facing a total payment of US$625 million for GMR’s investment of US$400 million in the airport project.
“The government gets peanuts at the end of the day,” Nasheed said.
“My argument to the government would be, Maldives government too must have gotten into this relationship based on certain calculations. Why should the Maldivian government suffer their calculations to keep GMR’s calculation unaffected by the court decision, over which the government has no control?”
Addressing the matter in a press statement yesterday, the Ministry of Finance claimed that the contract between GMR and the government would be violated in the event that GMR could not collect a stated fee. Therefore, the government had breached its contract.
The ministry did express support for the government’s recent agreement, however, stating that any damages should be deducted from GMR’s concession fee due the government.
Expressing shock at the Ministry of Finance’s statement, Nasheed clarified his intent to defend the government from the ministry’s first point.
“I would like to defend my government and say that the government did nothing on its own or within its control to breach an agreement. They have allowed certain charges to be made based on an opinin of the Attorney General that that charge was permissible under Maldivian law. Now, the Civil Court has said otherwise, and the government has not done anything to breach the contract. It’s a frustrating event that’s happened outside the contract and the government won’t take any responsibility for that.”
Nasheed today said he understood that a only small fraction (12 to 15 percent) of internationally-bound travelers leaving INIA are Maldivians.
“If the ADC was allowed, the burden of payment would have been born by international passengers, and only 12 percent Maldivians. And the government won’t have to bear any burden because the fee would be collected directly from passengers by GMR,” he said, reiterating that under the current arrangement the government would be paying revenue to GMR.
Minivan News asked whether exempting Maldivians from the ADC could put the matter to rest.
Nasheed believed exemption could improve the situation, and added that parliamentarians have discussed exemptions for Maldivians traveling to SAARC countries.
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I think Nasheed MP has played too much politics in the past but here is absolutely right.
I am amazed that the Finance Ministry has said that. Nothing in the concession agreement gives GMR the right to charge this 25 dollars without the explicit approval of The Majlis. NOTHING.
This is the crux of the issue. If the Government wants GMR to collect this money, then pass this in The Majlis and not one could say anything.
Why is the Government reluctant to do that?
As for President Nasheed saying that Maldives was 200% behind this deal, he is hallucinating. I am a supporter of MDP but this is a disaster for Maldives and he would see if he asks all the Maldivians, the majority would be opposed to this deal with GMR.
This is a deal that never should have been allowed to take place. I see nothing wrong in getting a foreign company to run the airport but what is wrong is the concession agreement and the way it was conducted.
Would it better to call it Ibrahim Nasir Didi International Airport (INDIA).
The only 2 explanations that I could think of are:
1. Anni himself or some people in MDPs upper echelons are getting a hell of a good cut out of this deal.
2. The USD25million is to be contributed by GMR to MDP's 2013 election campaign.
GMR can I have some cash and corex please.
GMR, I need some cash. MP Nasheed can collect on my behalf.
I'm no lawyer but am sure that if an illegal clause which allows the collection of ADC was included in the agreement by officials of the government, they will have to take responsibility for it. The state has to keep its word to the foreign party but the government officials who included the clause in the agreement will have to pay the state.
Hameed there is no illegal clause in the concession agreement. What is very clear is that GMR can charge the 25 dollars per passenger. The important bit is that they need The Majlis to ratify this 25 dollars before they can start collecting this.
This is where the Government and GMR has been not been transparent and trying to collect this without the approval of The Majlis.
In reality someone has made a lot of money in this and it probably is not the President at all.
Nasheed is totally right on this issue.
The more the government talks about how GMR should be fully paid all the time regardless of other consequences, the more we see the true relationship between the government officials and the government.
Nasheed was elected by the people pf the Maldives. His first responsibility should be to do what is best for Maldivians not for GMR... He should be 200% behind the people not GMR...
100% of the maldivians will be paying this tax
i silent man with khiyalhu ideas and comments. why cant u come out mr nasheed dont hide show ur also part of 30 year dictators gang and come out with gasim and the gang...
Once again try and look back the period This award was given GMR.
* Razee - Chairman of Privatization comittee
* Razee - Economics Minister - Governing Body for companies
* Razee acting minister for transport ministry - Ministry in Charge of Maldives airport company
* On the day of award within 6 hours the Chairman of airport company was replaced. Normally such process would take at least 1 week.
* The process was rushed to conclude while a Bill was in parliament on Privatisation of state assets.
And many more questionable filling in the blanks...
I would agree privatizing will benifit a country like ours but it is the process that made me nervouse even during that time.
Now we are seeing the darker side of the process and its weak points.
* Feasibilty study was done by Indian consultant for ADB
and many more........
In the process of growing up some people get stuck. Luthufee and Coralwood are examples.
Sorry its has to be Corex D, plus more cash for him.
@ Radhun,Razee also shareholder of a Le Cute outlet at the airport.
Correction - Not ADB should read as IFC
Mr. Manik, Please allow me to say Sir, that your comment is one of the most realistic and polite I have seen in this web-news-paper. It is very refreshing to see a comment based on facts and written with respect. Thank you Sir for the contents and for the polite way of expressing them.
Now, coming back to the subject, I do feel that something went very wrong with this airport subject. An airport is one of the main infrastructures of a country and in this case, is of relevant, crucial importance for the Maldives as it is the main gate (and so far the only – port aside) to the country, therefore it's a matter of national security and importance and cannot only be considered a commercial instrument but a strategic asset. Strategic assets cannot be handed over to one single third party.
Some readers of this paper express their point of view about the lack of money in the Maldives to build infrastructures – such reasoning is not correct. The amount of money made with the tourism held in bank accounts outside the Maldives would finance without any problem the airport. Naturally for making such operation, the government needs credibility, solidarity from the local business men and to fight against old ghosts. That is not an easy task.
Another way to make a deal would have been to allocate the project to a consortium, thus not depending on one company or one single country.
Another issue is what you mention about the lack of clarity towards the Majlis. Things don't work that way in a democracy. The present government indeed has committed very serious mistakes in this affair. And last but not least, there is no respect for local business people, with their shops and rights.
Without respecting the rights there is no democracy. A lesson needs to be learned out of this. Some of us had to struggle already with the previous government to create our business and pay bribes, sometimes of a very high price. It was other times and other government that I wish will never come back to power. I remember when I proposed to create an university (the so called sea university), a very important infrastructure for the development of the country, I would create with the help from Europe, the first thing I was requested was a bribe. Shame! Shame! But as a said these where older times.
There are 3 basic things that need to go along with a demo-cracy. Respect for the country, respect for people and respect for law and we know that before non of them existed. Now it is time to really change. The government has now a clear opportunity to show it is a democratic government.
In the airport affair something went wrong. I don't want to speculate or accuse without facts, but something went very wrong.
An airport these days is like a shopping center or market. Just see Singapore or Dubai for instance. London, Paris, Barcelona etc … There is place for all and the local business man should indeed have a place in the economy of the airport. GMR should honor the gift they have been made and rethink their policy, but so the government as THE leader and guide of democracy.
Some people say I am mad, because I lost my business. Some people say I am risking not be able to enter anymore the Maldives without facing jail because I protest. Maybe it is true, maybe I am furious but I do have a good reason. Nevertheless I trust that The Maldives has started a new life, a new path into a respectful country. That is my wish!
Something is not clear with this affair and I think the Majlis should take this in their hands and not stop until the deal is clear and reshaped. The role of the Majlis is not to defend the government but to defend the country. Definitely something went wrong. Definitely something needs to see the light.
With my utmost respect for you and for your country, yours,
Antonio
Thank you Senor Antonio.I am not merely speculating.
Radhun, Ibrahim Noordeen The Chairman of MACL refused to sign the concession agreement and he was forced to resign.Then a new Chairman signed.
I do not blame Anni at all in this. He was given terrible advice and probably did not know the whole story at all.
The airport had a turnover of over 80 million dollars per year and so if the Government was serious they could have gone for a VJ with a big airport like Changi or even Paris and still under Maldivian authority with foreign management.
This is a disaster for Maldives.
It takes a man who has some personal investment in an issue to bring it to light.
Thank you Mr. Antonio for making a point that Mr. Shafeeq had tried to impress upon the Maldivian people.
Also refer to Riffath Afeef's writings on the subject before this whole fiasco took place. He had begged and pleaded with Nasheed in 2008 to rethink the indiscriminate privatization policy followed by the government now.
He had clearly explained to the President the dangers of leasing strategic assets in a country such as ours. However Nasheed who had met with Riffath before becoming President had refused him an audience afterwards.
We have got ourselves into a quagmire but the Maldivian people lack the knowledge and education to understand the implications to themselves because of these issues. They do not understand that the businesses they hate so much provide them and their families with employment as well as vital funds from taxation which finances their health and education systems as well as their precious governments and political parties.
The yellow-tie-wearing know-nothings appointed to silly posts in the MDP fail to understand that they butter their bread with hard-earned cash from the tourism industry built by the sacrifice and toil of businesses. By sidelining Maldivian businesses and creating pathways for foreign-exchange to flow outwards while allowing foreign investors to refuse employment to locals we are threatening our own future and becoming second-class citizens in our own country.
However the yellow pom-pom waving fanatics will not understand until and unless they begin to starve.
tsk,tsk, good comments. The problem was that MDP was helped by the British Conservative Party and they were the party who sold all the national assets in the UK, including the British Rail, British Airways, British Airports, British Gas etc.
Now these companies are all owned by foreign entities and the British have no say in how it is run.
The trains do not run on time, there are strikes, Heathrow could not clear the snow last year, all shambles.
The privatisation of national assets is something of a bygone era. Now most countries are not doing that. The Government in Maldives think they are part of the British Conservative Party and that is the main problem. The terrible economic policies of the Conservative Party is ruining the UK now.
None of these companies should have been sold off. The government claims that Maldivians were not able to run them. Yes that is true, when they themselves appoint imbeciles to run such organisations it would fail.
If they cannot find Maldivians, what is stopping them from hiring foreign experts to do so.
A lot of countries and companies do so.
Let me tell you something of this bridge between Male and the Airport. It is going to cost billions of dollars to build it and just think how many millions it is going to maintain it?
This is pure madness. How on earth can the Majlis let our country be destroyed?
If he wants better commuting, improve the ferries by all means but a bridge? So near the airport, it is going to be so high that ships can navigate underneath them. Do not tell me the channel near Villingili. It is too shallow for that. So that means there would be problems for the aircrafts landing at Male' International Airport.
I hope that we can stop these things before the whole of Maldives is sold to foreigners.
Mr manik
Why are you so sure that President Nasheed is innocent in this? As the president says he is always thinking one step ahead in this game and everything happens under his watch and under his plan. So how can he not know? If there is corruption in this deal, then it is his duty to know. And since he is deciding this he should take responsibility and blame.
fanatics ... sigh so much for serenity as a Slogan for the Maldives... Amman omaan Dhivehi Raajje indeed there goes that out of the window for far Iam seeing political surveys in the works from all sides not much is done sustain tranquility and equal distribution of resources around the country in the country to Day is National day or so I am told yet at 00:10 am theres Halabolly infront of the supreme court with people yelling and making a rakuss seeing as I live near by I can here the sirens now and its what 1:07 so saying goodbye to investors from abroad is a good thing I been saying to friends who have been eagerly waiting to come hear to wait until things calm down but it looks like for the next two years nothing going to change if anything its going to get worse so I am feeling it obligated to all my friends from abroad to stay away from the country for their own safety I dont want my friends to view my country as a fanatic breeding ground on their very first visit....