Infrastructure company GMR has said it will deduct revenue received from collecting a US$25 (Rf385.5) Airport Development Charge (ADC) from every passenger departing on an international flight from the concession fee to be paid to the government.
GMR informed Maldives Airports Company Limited (MACL) last Thursday of its decision. MACL officials had not responded to inquiries at time of press.
GMR planned to begin collecting the ADC at midnight on January 1 this year as per its contract with the Maldives government. Revenue was expected to amount to US$25 million (Rf385.5 million) in 2012, and would be put towards the ongoing development of Ibrahim Nasir International Airport (INIA).
However, a Civil Court ruling in December blocked the ADC on the grounds that it was identical to an existing Airport Services Charge (ASC) of US$18 (Rf277.56). The company’s shares on the Mumbai stock exchange subsequently fell 7.57 percent, India’s Economic Times reported.
The government subsequently appealed the case to the High Court. Meanwhile, GMR is not collecting the ADC.
Economic Development Minister Mahmoud Razee said that the concession agreement between GMR and the government assured each party a certain level of income.
“Because the ADC was included as revenue, until the matter is resolved any money that was going to be received from the ADC should be deducted from what GMR owes the government,” Razee explained.
Razee said that the Ministry of Finance will work with GMR and the government to resolve the matter, adding however that much of the decision rests on a verdict from the High Court.
He added that the related Amendment of Collection of Airport Tax (international travelers) Act 7/78 Bill is also before the Parliament, which is currently in recess until March.
Razee was optimistic about the outcome, however far in the future.
“The contract between the government and GMR allows for certain changes which are mutually respected and agreed upon by both parties,” Razee observed. “They will reach a win-win situation, even if some revenue is lost.”
GMR previously noted that the payment of a development fee was “a common concept in many airports globally”, particularly as a part of concession agreements where airports are privatised.
“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 claimed that the charge was included in the concession fee proposed between GMR and the government in 2010.
Meanwhile, in April India’s Supreme Court ruled against the charging of airport development fees which are not approved by India’s Airport Economic Regulatory Authority (AERA). However Delhi airport, developed by GMR, continued to charge the fee as GMR had obtained permission to collect the sum in 2010.
Speaking at the groundbreaking ceremony for INIA’s new terminal on December 19, 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.”
The public response has not been so positive. Following GMR’s closure of duty-free shop Alpha MVKB, company CEO Ibrahim Shafeeq organised a protest under the slogan “Go GMR Go!” The protest was held on the grounds that the company was “demonstrating our opinions and dislike of what GMR has done to us and to get public responses,” Shafeeq told Minivan News at the time.
Kulhudhuffushi-South Independent MP Mohamed Nasheed also proposed an amendment to the Business Registration Bill in a bid to reserve airport shops and services for local ownership and “clip GMR’s wings”.
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and the maldivians are in a lose-lose situation
There was a time when I told a lot of people that if there ever came a time when Mahmood Razi would contend for the presidency of Maldives I will be the first person to support him. I was wrong. dead wrong. 🙁
Nothing anyone can do.
The government failed at the negotiations during the actual contract drafting.
As silly as it sounds the upfront acquisition fee seems to have been the only consideration. To be fair share of revenue from fuel sales were also added to sweeten the deal.
No doubt the contract favors GMR more than the Maldivian State. Although of course the MDP would receive cutbacks from GMR to consolidate their rule.
This is madness! Raazee is a jewish businessman who sells products like Gucci, Hugo Boss and all that, which obviously has alcohol! These brands use half-naked Jewish fornicating women, and Raazee displays them everywhere, from the streets of Male' to the duty-free shop at the airport! Such Jewish activities can't be tolerated. I advice all pious Maldivian Muslim brothers and non-fornicating sisters to boycott his business, and also, lower your gaze when you walk past the posters of Jewish women promoting his business!
We must honor our agreements however good or bad it is. This is the best thing we have done to develop our airport which is our gateway. Gasim is upset because he wanted special treatment and avoid paying fees just because he has a local airline. Gasim, under this administration there is no free lunch.
Sheikh Imran Abdullah
Why are you so full of hate?
Why do you continually rant about Jews?
Are you a Nazi?
Do you despise the world around you?
Are you really so insecure?
Why do you not leave the Maldives in peace and go to live in a Taliban state?
Do you know the difference between a Muslim, a Buddist, a Christian or a Jew?
That last question I will answer for you as they are all just humans who live on the same earth as you, believe in a higher being like you and have the right to believe in their higher being of choice.
Razee, Dot try to make us pay for your blunders. How can you make the poor public pay for an illegal fee that you offered GMR.
Does Raazee think we are all stupid or is he a complete retard himself declaring this as a win-win when the government is forgoing all the revenue equal to ADC and GMR is losing nothing... This is outrageous...
yaamyn == Sheikh Imran Abdullah
Pls stop using Sheikh Imran Abdullah's name.
@ concerned Citizen
This nincompoop calling himself Shaikh imran abdulla thinks he is just one fine bastard
Razee was to get $25million every year from GMR for including the ADC in the contract. GMR gets $100 million and Razee gets $25 million on ADC depending the passenger traffic. it was a win situation for Razee and GMR but not anymore
Raazee seriously think this government is sane? I believe he is a clean man, but he is distroying his image!
Have the people of this country paid (tax)anything to Government for developing its assets claiming that they have done something . You want to spend money for Srilanka,Malaysia and Singapore but not for your country
finally an admission of the huge mistake but 'win win' is such a cliche'
GMR case should be studied in MBA classes as a perfect example of poor negotiating and in experience
We will see more blunders in the near future. This is what happens when you only think of self gain without any national interest. I just wonder how many such silly contracts govt has made during this leadership.
Mr Razee completed his degree and masters in Civil Aviation.
Aviation. Hence he has a birds eye view of everything happening in the Maldives. That is the reason why Anni has chosen him to realign ministries whenever there is a need.
Dont criticize Razee. He is Mr Know-it-all because he sees-it-all.
Sad! So Airport is being developed by using our money! What kind of a deal is this? Even I can do that! Government is giving our tax money to develop the airport (indirectly) and GMR gets all the money! what kinda win-win is this?
When it comes to GMR, I can’t trust Minivan or MDP. Minivan always put that glossy computer generated image and tries to put the best spin around the story. If we ever get that airport build, it would have cost the people of Maldives a lot (almost like building from gold) and GMR would have done a shabby job (underinvestment as it has to pay so many stakeholders including newspapers). Like MNSL is for Maumoon, GMR is MDP’s corrupt apple. It’s rotten to the core (Moosa dredging contracts, etc), no wonder president is 200% behind the agreement (why not 20,000,000%).
Only racist Maldivians will hate international investors. Who will invest here without a return of profit.
The other view:
http://abadeeu.wordpress.com/2012/01/04/gmr/
hassan ahmed,
"yaamyn == Sheikh Imran Abdullah
Pls stop using Sheikh Imran Abdullah’s name."
Oh noez! Your genius has revealed my super top-secret identity to the whole world!
Why, I would have gotten away with it too, but for you damn meddling kid.. Curses! *waves fists in the air*
"Only racist Maldivians will hate international investors."
NO! Only retarted and stupid Maldivians will love GMR! As many have pointed out, GMR is the winner here, full stop! The Maldivian government and thus us, we all lose. Raazee has already agreed with GMR to deduct the $25 from the fees GMR pay to the State.
That's illegal. GMR is obliged to pay a certain level of fees. Of course, what we have here is the Maldivian government, i.e. Mr Raazee and Co., colluding with GMR to save their face. The government made a huge blunder and are now set to lose millions of dollars in revenue annually.
Raazee is a moron or a very devious and corrupt businessman only interested in his own pocket. I suspect the latter!
Doesnt anyone get the feeling that Minivan News only prints pro-GMR news ? Every article they write is in support of GMR, or presents some explanation from GMR regarding some con GMR is going to make.
The airport development charge is a con on the entire Maldivian people now matter how Minivan news tries to present it in a positive light.
Imagine the absurdness of Razees statement. As per tourism Ministry's annual statistics there are 7 million tourist arrivals to Maldives per year. Collecting $25 from all of them will mean, GMR has to receive 175 million dollars per yer from ADC. That amounts to 2.6 Billion rufiyaa.
Now estimating that GMR is paying 500 million per year to Maldivian authorities, Razee (or GMR's spokesperson ) is saying that if they dont receive their 2.6 billion rufiyaa that is rightfully due to them (AND RIGHTFULLY DUE, THEY HAVE INVESTED A WHOLE BILLION IN NEW PARTITIONS IN THE AIRPORT AND NEW BUCKETS TO COLLECT RAINWATER), they (GMR) are going to deduct that 2.6 billion rufiyaa from the amount they give to Maldivian govt.
Thus if the high court rules that GMR can never take Airport Development charge then the Maldives govt will have to pay GMR 2.1 billion rufiyaa ! IMAGINE THAT ! (2.6 billion rf ADC - 500 million rufiyaa revenue) means GOVT OF MALDIVES NOW OWES 2.1 billion rufiyaa to GMR every year !
You cant back down from this now silly govt of mine that doesnt know even how to calculate properly !
@Zeena Gasim:
Investment =/= Day light robbery. This is a completely lopsided deal.
Why is Sheikh Imran Abdullahso accusing everyone he doesnt like of being a jew?
When the GMR and government work out a win-win situation or solution to the row over the US$25 ADC and other problems arising from the deal on the airport development, the GMR and the general public are in a win-lose relation with them. The government must ensure that the GMR enjoys no unfair advantage from its operation of the Ibrahim Nasir International Airport. The GMR should not be allowed any business that its predecessor was not.
Despite the public outcry, the GMR continues its plan to replace the duty-free shops and frustrate the local staff to the point that they would leave the job so that the GMR could eventually replace them with Indians. The government should not be content with these complaints and allow the GMR do as they wish.
That glossy computer generated image again! Hehehehe, and MDP activists are buying all this bullshit.... Hehehe