The Transport Ministry has said the government is “fully behind” an order given by the Maldives Airports Company Limited (MACL) to India-based infrastructure giant GMR, that it pay the sum of US$8.2 million deducted from concession fees for the first quarter of 2012.
GMR took over the management of Ibrahim Nasir International Airport (INIA) – then called Male’ International Airport – from the government-owned Maldives Airports Company Limited (MACL) in September 2010.
Speaking to Minivan News today, Minister of Transport Dr Ahmed Shamheed said the government fully backed an MACL order for GMR to return the US$8.2 million it deducted from concession fees for the quarter.
According to a statement released by the MACL earlier this month, the company said it had only received US$525,355 out of an expected US$8.7 million in concession fees for the first quarter of 2012, after GMR deducted the Airport Development Charge (ADC) and insurance surcharge.
The ADC was intended to be a US$25 fee charged to outgoing passengers from January this year, as stipulated in the contract signed with GMR in 2010. The anticipated US$25 million the charge would raise was to go towards the cost of renovating INIA’s infrastructure.
The deductions were made after the Civil Court blocked the India-based company charging an Airport Development Charge (ADC) last year, on the grounds that it was a tax not approved by parliament. As the ADC was stipulated in the contract former President Mohamed Nasheed’s administration had signed with the airport operator, the government at the time agreed that GMR would deduct the charges from the concession fees due the government, pending appeal.
The Civil Court case had been filed against the airport by the former opposition Dhivehi Qaumee Party (DQP) – now part of President Mohamed Waheed Hassan’s coalition government.
Parliament’s Finance Committee has meanwhile revealed that the Maldives is facing a skyrocketing budget deficit of 27 percent for 2012, and a parallel 24 percent increase in expenditure.
Last week, GMR released a statement proposing a compromise to the government whereby Maldivian nationals would be excluded paying the ADC when departing the airport.
MACL stance
MACL Managing Director Mohamed Ibrahim told local media today that MACL’s agreement with GMR under the previous government to deduct the ADC payment was “null and void”. Ibrahim told reporters that the deal was no longer relevant as it had been agreed by a former MACL chairman, and that charges could therefore no longer be deducted from GMR’s concession payment.
“We had informed that the letter from the former Chairman of MACL was now invalid and hence must not be followed. In addition we had also informed that no deductions can be made from the concession fee,” he told local newspaper Haveeru.
Ibrahim was not responding at time of press.
The MACL order was announced the same day that President Mohamed Waheed reportedly assured Indian Prime Minister Manmohan Singh that the government would uphold its commitments to foreign investors.
“It is only recently that the Maldives began working with large foreign corporations, and hence the Maldives has not much experience in dealing with large companies. That’s why we are currently trying to iron out some of these issues through mutual dialogue,” President Waheed said.
Transport Minister Dr Shamheed however told Minivan News that the President’s pledge would not affect MACL’s decision to order GMR to pay the deducted US$8.2 million.
“As per the concessions agreement, a fee has to be paid to MACL. That is my understanding,” he said.
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Hassan Saeed is an evil man. He wanted to derail any government progress when opposition and now that he has assumed power with the coup, he wants all the benefits of the airport development for the economy and his cronies. Sorry, but you can not have it both ways, but evidentially you can be wrong twice!!
The business climate in the Maldives is now more like a tinpot African country then the young elected democracy that it was. If this new regime can not see how desperately the Maldives needs to have a new airport and how so many political opposition agenda's are invented to unsettle the former President, why would I care to invest here now? The environment is "toxic" and high risk.
I will await the final CMAG conclusion via this revised committee before I make my final decision to invest, or not.
The airport is the pride of our nation which clearly shows the solidarity of the Maldivians prior to this Bodu Hulhu democracy. The Maldivians are dead against this corrupt deal of our previous autocratic leader, Anni from the very beginning. This deal clearly favours the GMR and some selective members of MDP rather than the Maldivians in general. This deal clearly does not favours the Maldives. There is no way they can deduct ADC from the the concession fees. The previous corrupt Minister of the Bodu Hulhu government who signed the letter should be charged in courts. The previous government is full of corruption and nepotism and do not uphold the rule of law. Annis drinking buddies have all the advantages and that is not a sign of young democracy.
Free our 100% Muslim airport from the fists of our Hindhu Neighbours. Imranullah pls call everyone back to Lonuziyaaraih kolhu. Allah Akbaru.
The airport deal was rushed and flawed. The new political and investment environment also is highly unstable. There are few incentives for investment now. The courts system image is compromised. Maldives could have the money of the world flowing through its banks, but the way things are governed, why should the new rich of China and India invest here? It's not just MDP vs. DQP or PPM or whomever. It's about a vision for Maldives as a prosperous country with laws and taxes that promote investment and growth... and if you have growth, you will always be building wealth. All the parties in this airport deal need to re-evaluate what will work for Maldives and the airport user and consumers going forward. The cost, the design, and the decision making process must work for everyone. The original plan may have been overly ambitious. The demands of government today may be overly ambitious... but we need new investment and we need development. So, the parties are eventually going to have to recognize the need to make a workable plan that both sides can live with. And for GMR, that means they'll have to visit their bankers and financial planners and make a new plan. Sorry, but you sold a deal to everyone that couldn't sustain itself. When you do that, the contract is only worth the paper its written on and nothing more. The airport is the core of our transportation system. It is a core revenue source for the whole country, not to mention the government. No deal will be perfect, but any deal that will survive has to be something most people can settle for... not something that becomes a major point for change in government and that causes your customers (airlines) to refuse to pay! When you reach such a point, you must realize the fundamentals are flawed and substantial rethinking and compromise is required.
This is not about GMR or any other potential investors. This a bad deal for Maldives that would have terrible consequences for decades to come if this is allowed to go ahead.
This is more than the 25 dollars. This is about the future of Maldives.
As Adam, says the only solution is for the parties to revisit the agreement and sort the problems out or for the government to pay back what GMR has paid and invested( which is minimal) and get the airport back.
There is no way any decent government could accept this deal irrespective of who the party is.
Collecting money takes 75% of our tme these days. I is easy to sell a product or idea but so damn hard to collect your dues
I think we are not against GMR but we are against the corrupted deal that was done between Anni and his clans. If the government can negotiate with GMR to have a fair deal then it should be OK and many of the people will be fine.over 20 million dollars worth fuel stock with a hand shake for GMR and GMR only paying 10% of the profit to government after 3 months of the sales ?
If someone gives me such assets, i would be more than happy to pay 90% of the profit to the owner and even 10% profit would be fine and am sure any one would do that.
These are the things that we are talking about and not because it was GMR but rather talking about the conniptions under which the contract was given.
We all know that airport need to improve and may be require foreign support to enhance the airport but it does not mean that we just give everything and get nothing in return.
The problem with the airport company is not that because it was not making money earlier but the people in the company was corrupted and we could have changed the people who were corrupted from Gayyoom era .
Singapore airport company and heathrow airport company had also put the letter of interest but Anni never communicated with those people knowing that he will never be able to get any kick back from the deal except dealing with GMR.
If Anni genuinely want to improve the airport , then he should have negotiated with the Singapore airport company and they would have invested more money and our airport would have been much better by now than what it is .
Corruption is wide spread in this country and it has infected the whole country and this is something that carried forwarded from Maumoon Era and then Anni has modernized the corruption to do it openly.
No wonder - mvcoup regime is looting the state coffers as never before - too much even to mention here again. And we the people will get the burn of it.
Get back Maumoons millions abroad. Get back Gaseems, Umars, ... the whole alphabet with names ... Make those resort owners pay INCOME TAX. Keep the bills of all looting and make them pay back. If not : jail them till the f*** off.
Wonder : India will like this illegitimate government only if they pay, both there debts and their bribes.