No response from government over ADC amendment proposal, reveals letter from Rao to Waheed

Chairman of Indian infrastructure giant GMR, G M Rao, has reiterated the airport developer’s proposal to exempt Maldivians from paying the contentious airport development charge (ADC), in a personal letter to President Mohamed Waheed Hassan Manik.

Rao’s letter, dated November 21 and obtained by Minivan News, proposes that an increased fee of US$28 be levied from all international departing foreign passengers, in order to compensate for an ADC exemption for Maldivian passport holders.

Rao’s letter, sent on November 21, states the importance of the ADC and that the current non-levying of the ADC was benefiting international foreign passengers rather than the government.

“The ADC significantly contributes to the cash flows of [GMR Male International Airport] and undoubtedly, in turn significantly benefits the GoM and the Maldives Airport Company Limited (MACL) by way of concession fee payments.

“The said non-levy of ADC and Insurance Surcharge (IS) has resulted (at the costs of GMIAL and eventually MACL/GoM) in an entirely unintended benefit to the international foreign passengers who are enjoying and would enjoy in future as well, the enhanced facilities and privileges at the airport without commensurate payment,” the letter reads.

Following a Civil Court case filed in 2011 by the then-opposition Dhivehi Qaumee Party (DQP) blocking GMR from levying ADC from international foreign passengers, GMR – under instruction from a letter sent by MACL – has been deducting ADC revenue from concession fees due the government.

Following the removal of ADC, the government has received a succession of bills from the airport developer throughout 2012.

In the first quarter of 2012 the government received US$525,355 of an expected US$8.7 million, after the deduction of the ADC. That was followed by a US$1.5 million bill for the second quarter, after the ADC payable eclipsed the revenue due the government.

Combined with the third quarter payment due, the government now owes the airport developer US$3.7 million.

According to Rao, the proposal exempting Maldivian passport holders from ADC and instead charging all international departing foreign passengers from INIA an increased ADC fee, is out of “deference to the Maldivian public sentiments” and to “ensure the unintended financial loss to GMIAL, MACL or GoM is contained”.

So far however, Rao states that has been no correspondence from the President’s Office regarding the proposal prior to the sending of the letter.

Minivan tried to contact the President’s Office, but there was no response at time of press.

MACL’s report “ridden with calculation errors”.

A further report addressed to President Waheed, entitled: ‘Concession Agreement dated 28th June 2010 relating to INIA, Male – purported report submitted by MACL regarding benefits to Maldives’, goes on to provide “accurate” and “factual” information relating to the benefits to the Maldives that the GMR-Malaysia Airports Holdings Berhad (MAHB) Consortium envisages.

Commenting on MACL’s recently prepared report that implies airport concession will have a negative impact on the Maldives, the GMR report claims it is “ridden with calculation errors” of which are “not only highly misleading but are full with errors and oversight”.

“It is estimated that over the concession period, GMR-MAHB will pay more than MRF 32.5 bilion to MACL as concession fee and MRF 12.5 billion as Passenger Service Chards (PSC) to the government.

“MACL report claims that if MACL operate the airport, they will make a profit of MRF 60 billion. However, once the errors in their report are corrected it will show that they will make a profit of MRF 18 billion only.

“The report also claims that when GMR-MAHB is operating the airport, MACL will make only MRF 21 billion. However, once the errors are corrected it will show that MACL will receive a concession fee of MRF 32.5 billion from GMR- MAHB,” GMR’s report claims.

Recently there has been mounting pressure from parties within the Maldives calling for the government to annul the agreement with Indian infrastructure giant GMR.

According to rumours circulating on social media sites, the government will allegedly cancel the GMR contact at a cabinet meeting on Tuesday. Tweets were being circulated speculating that a Chinese intermediary was prepared to pay for the contract termination and take over the airport development.

However asked to confirm or deny these rumours, Economics Minister Ahmed Mohamed said he was “unaware of any such action”.


20 thoughts on “No response from government over ADC amendment proposal, reveals letter from Rao to Waheed”

  1. Assuming the Chinese take over the Airport and pay for the termination of the contract - how do they expect to recover what they spend? An outside financier is required for the bail out as the GoM does not have the funds. Will Sheikh Imran and his 'Rent-a-Sheikh' business wage another 'Jihad' against the Chinese? This whole thing is beginning to look like a circus?

  2. Bailout cost of 500 million is after GMR fully developed the airport with the new terminal. In the current status, bailout cost is not going to be that high since GMR had not invested much in airport yet.

    GMR business plan is very cunning and their objective is to kill all local businesses and take over the all the businesses operated in the airport.

    GMR had formed a JV company with a foreign party to run all food and beverage outlets in the airport.

    GMR is going to kick out all bonded warehouse from airport.

    GMR had kick out all duty free shops run by Maldivian .
    GMR is going to build a mega shopping mall in the airport for the tourist to kill all small souvenir shops in Male'.

    Rao have not given reasonable offer and all his offers are beneficial to him not to the country.

    Rao has reduced the initially agreed 10% of the profit after 2014 to 1% using his power and corruption. Anni agreed to reduce even the 10% to 1% just for few millions that he hd pocket and leaving the country to suffer.

    It is not true that MACL is going to make more profit than GMR but truth of the matter is that GMR is going to earn fat profit at the expenses of our country and MACL will incur a loss

  3. Just like the al-Kharafi Case... Regarding GMR case, the fact is that GMR contract will be put to hold. and it will remain in arbitration for long years. And finally Maldives Govt end up paying billions in compensation.No Chinese will pay the money. ALL the LOSS will be to the PEOPLE of Maldives. Waheed and all politicians will remain happy. Worse come to worse just change your party and you remain in the Coalition either as Vice President or Adviser or A Cabinet Minister. This is the reality , believe it or not...

  4. Take it or leave it. See you in court. India will channel foreign aid from Maldives to GMR to cover their losses.

  5. Most expats employed in Maldives are paid by Maldivians and at the end of the day the tax will be paid by us making it more costly to employ expats that we need to develop our country.

  6. So the plan to save the Maldives from India and keeping airport with Maldives is to give it to Chinese company. Maldives is so full of hypocrites.

  7. Interesting to see the developments in Maldivian politics. Being from Bangladesh I don't have sympathy for this country. When I was there I have faced a lot of injustice and inhuman treatment.

    The Indian Govt will have it's 'Pound of Flesh'. And the Chinese guys will step in and give a karate kick between the nuts.

  8. I just can't help laughing at the stupidity of the statements being made here. Why would the Chinese get into a certain loss making venture and into a political quagmire? Sure, the Chinese would love to kick the arse of the Indians, but not at a huge guaranteed financial loss!

    In any case, handing over this "national treasure" (sarcasm intended), to the Communists hardly justifies the rhetoric of the Mullahs protesting on the streets. After all, the Chinese aren't exactly renowned for their treatment of workers or for their exemplary democratic principles. Jumping from the frying pan into the fire comes to mind at times like these...

  9. Maldivians are second class citizens compared to Indians, who are much intellectual and intelligent than Garudiya Maldivians who eat fish all day. Thus it is the right of Indians to demand that Maldivians pay GMR to manage their airport. Why delay the inevitable ?

  10. In the long run, neither India nor China will lose. 500 million is a pittance for large nations like them. But our nation will go into a deep pit. No nation will trust us after our betrayal of a friendly neighbour. And tomorrow when the is real danger of a Taliban-style takeover, don't expect India or any other nation to come to our rescue.

    Our nation and citizens will never forget or forgive the coup leaders for the short-sighted destruction of our nation.

  11. "GMR had not invested much in airport yet."

    I love it when paid mouthpieces of the enemy regime are forced to lie.

  12. President Naseed is Originated from Rehka ge Bureki Nanning and Hakuraa ge' Kulhu Mohamed the kindom was supported by Kannanoor Ali Rajaa.

    India can cane take the Dissension the they took against Gorge Spite why not this is en out low even Govt.

    The Govt. even cannot change en agreement with out courts. this is silly

  13. This is not about India. Just like there is corruption everywhere we have corruption here too. The challenge is that it involves an Indian company. So if a corrupt deal involves an Indian (or another crucial partner country's) company should it be ignored?

  14. Who had said the airport will be taken and then given to chinese ? The Government has not said and all these are just mere speculation and words that had come out from Anni and Zaki mouth.

    I am sure there number of airport operators who would love to take the airport management , swiss port is one of the potential party and they have even got the first place in the bidding process when Anni opened the so called " biding process" . But they were not given because they refused to pay a cut to anni and his associates.

    Even after removing the GMR, we the Maldivian can also managed the airport . It is not that there are no Maldivian who have the capacity to manage a company like MACL and it is not need to be a foreign company that can only manage airport.

    Airport was managed by Maldivian for over 40 years and it had been developed as of today by Maldivian and the country had developed as of today by Maldivian.

  15. I think Maldives will have it nicely cause 90% or more are hypocrites.The whole idea is born by your Gayoom Dictator.During his power he gave India Air space, and China under sea.but ,,,,,,,,,,

  16. The Islamist Government cannot pay the government salaries on time and other commitments. LoL how can they pay USD75 Million advance rental payments paid by GMR, the cost of the investments they made and terminating loss/cost.

    Kaalhu Waheed gets his economic advice from terrorists like Fahari Imran, Umar Naseer. both are failures

  17. Why don’t this 23 December Ittihard run after Dictator gayoom and his cronies, to collect the monies they stole in their 30 year dictatorship.

    these people wont do it caz they are bloody hypocrites.

  18. during Gayyoom era , we are much better off than Anni era.

    Our electricity bill had gone rocket high and water bill was higher and dollar price was increased .

    Anni the dictator increased the dollar value just to manage his wage bill for two months without even considering the impact that would had on over all economics.

    We started to face this dollar shortage from the time GMR took over the airport and MACL was one of the company who have been bringing huge forex to the country.

    After it was taken by GMR, they are taking all the forex back to India leaving only 1% within the country. We are talking here over 100 million dollar turn over from airport.

  19. do you think China will give free money or interest bearing loans without any collateral to Maldives government.

  20. Second Afghanistan in making- Maldives

    Tourist will stop coming to this country from 2013 and you will ahve only mullahs.

    No economy , no revenues to the Maldivians

    Enjoy your bright future


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