Waheed opposes GMR’s concession fee deduction, seeking a “solution”

President Dr Mohamed Waheed Hassan has said that the government is seeking a “solution” to the deduction of US$8.1 million from concession fees paid by GMR, the Indian infrastructure giant which has been developing and operating Ibrahim Nasir International Airport (INIA) since it was awarded the concession by former President Mohamed Nasheed’s administration in November 2010.

The government received only 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) chargeable under its contract but which was thrown out after a Civil Court case on the matter was filed by the opposition during Nasheed’s tenure.

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 Civil Court blocked the fee on the grounds that it was essentially the same as a pre-existing Airport Services Charge (ASC), and that any new fees would constitute a new tax and was subsequently required to go through the People’s Majlis.

The case was filed by then-opposition Dhivehi Qaumee Party (DQP) – which had opposed the handing of the airport to GMR.

“I do not believe [the ADC] can be charged in the current situation because of the court’s decision,” Dr Waheed stated while speaking to the media at the inauguration of the Civil Air Navigation Services Organisation (CANSO) Asia-Pacific Conference held today in the Kurumba Maldives Resort.

According to the President, GMR can only take the Airport Development Charge following the “completion of all necessary legal procedures”.

“We are now having discussions with GMR. The government has now formed a team. As they are proceeding with the discussions, I believe a solution will be found without further delay,” President Waheed noted.

“Some of the things related to [the ADC] must be coordinated with the parliament. Therefore, when parliament convenes after the recess, we will submit the matter. So the work will proceed with parliament’s decision,” he said.

Parliament is now in recess until early June.

Managing Director of the Airports Company Mohamed Ibrahim was recently quoted in the local media as saying that the current administration does not support the decision of former President Mohamed Nasheed’s government to allow GMR to deduct the ADC from the concession fees.

GMR has been asked to reimburse the deducted amount, Ibrahim said.

GMR has not commented recently on the subject, however it noted following the civil court ruling that the payment of a development fee was “a common concept in many airports globally”.

“The reason for the inclusion of ADC in many global concession agreements is to address the funding needs to meet the investment model required to upgrade and develop new airport facilities at significant costs,” GMR stated.

The company further stated that the charge was included in the concession fee proposed between GMR and the government in 2010.

Speaking at the groundbreaking ceremony for INIA’s new terminal on December 19, then-President Nasheed said he wished to assure GMR that the government was “200 percent behind your contract, and every single other contract the government has signed with any other foreign party in this country. Not just contracts signed by our government, but also contracts that any ruler of the Maldives has signed with any party. We will honour it.”

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