Tag: airport

Fault in Laamu Kadhdhoo aiport’s only fire truck causes operations to halt

The only fire truck at Laamu Kadhdhoo airport failed to start this morning causing airport operations to come to a halt.

Due to a fault in the fire truck, Ahmed Ali, who is currently in charge of the airport, said it had not been possible for any aircraft to land at the airport since 9:30am.

Operations were also suspended yesterday due to the same problem.

“We only have one fire truck. The truck has failed to start, so operations have been suspended,” Ali told local media.

While efforts to repair the truck were underway, Ali said that some of the equipment required to repair the truck was not at the airport.

According to Ali, airport operations are to resume by 8:00pm tonight (December 17).

Aviation law prohibits airplanes from landing at an airport without the presence of an operational fire truck.

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“There was a legitimate contract signed. We are disappointed”: Malaysian Trade Minister

The Malaysian government has expressed “disappointment” at the scrapping of the Maldives’ “legitimate” contract with the GMR-Malaysia Airports Holdings Berhad consortium.

Indian media reported that Malaysian Prime Minister Najib Tun Razak was scheduled to visit New Delhi towards the end of the week and would likely be discussing the matter with Indian Prime Minister Manmohan Singh.

Malaysia’s Consul General in Chennai, Citra Devi Ramiyah, told reporters in Delhi that it was too early to speculate whether MAHB would seek compensation from the Maldivian government, which voided the GMR-MAHB concession agreement and ordered the company to leave by December 7.

The government had earlier dismissed a stay order for the eviction granted by the arbitrators – the Singapore High Court – as an affront to the country’s sovereignty. A day before the end of the seven day notice period, the injunction was dropped on appeal after Chief Justice Sundaresh Menon of the Supreme Court of Singapore declared that “the Maldives government has the power to do what it wants, including expropriating the airport.”

Ramiyah told reporters that the Maldivian government had shown its intention “to do the project on its own and [was] willing to compensate financially. So, it is very early for us to comment.”

Malaysian Minister of International Trade and Industry Seri Mustapa Mohamad was more concerned, according to the Economic Times, and expressed hope that the Maldives would reconsider its decision to evict the investors.

“In Male we have enjoyed very close ties with the previous government for many years. The Maldives is 100 per cent Muslim country. Of course, with the new government the lesson for us is we should be more careful, more due diligent,” Mohamad said.

“We want our investments to be protected. There was a legitimate contract signed. We are disappointed,” he added.

GMR meanwhile handed over the duty free stores today after being ordered to do so by the government.

“GMR has vacated the duty free shops at the airport. So since they’ve cleared their goods, no services will be provided from the shops,” Maldives Airports Company Limited (MACL) Rahmathullah Ashraf told local media.

Andrew Harrison, CEO of GMR Male International Airport – GMR’s side of the voided airport development – dismissed claims in local media that the company had “stripped” the duty free store ahead of the handover.

“We were asked to close duty free by the 17th. It is not true we have stripped duty free. We have destocked and in some cases returned goods to suppliers, or found buyers through appropriate customs procedures,” Harrison said.

GMR had sought a smooth transition after being ordered to handover the airport “as we did not want passengers or carriers to suffer,” he said. “The only area left where we [were] active was duty free.”

GMR staff had begun returning to India, particularly those involved in the construction of the new terminal after the cancellation of the contracts to build it, he said.

The government has not yet declared what it intends to do with the foundations of the abandoned terminal project, built on 60 hectares of reclaimed land on the other side of the airport island.

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Maldives airport operator praises “smooth” handover as government remains undecided on INIA future

The Maldives Airports Company Limited (MACL) has said there has been no disruption to services at Ibrahim Nasir International Airport (INIA) after it resumed management of the site from infrastructure group GMR on Saturday (December 8 )  – a claim backed by several resort operators and airlines.

Indian-based GMR yesterday handed INIA over to the state-owned Maldives Airports Company Limited (MACL) after the Maldivian government had voided its concession agreement, giving the company seven days to leave the country.

The sudden eviction of the developer – which won a 25 year concession under the former government to manage and upgrade the airport – scraps the project, which at US$511 million was the single largest foreign investment in the Maldives.

Upon reclaiming management of the airport yesterday, MACL Managing Director Mohamed Ibrahim told Minivan News that the handover had gone “smoothly”, with INIA continuing to operate over the last 24 hours as it had done under GMR.

“We have the same staff and equipment here as before [the handover]. Two years back we handed over the same equipment to GMR and there has been no discontinuation of service,” he said.

As part the GMR’s concession agreement, aside from developing an entirely new airport terminal building, the company had also undertaken work to renovate and update INIA’s existing terminal structures and operations – including retail and baggage handling facilities.

With MACL once again managing the site, a senior services manager for one of the largest airlines presently flying to the Maldives told Minivan News that it had experienced “no issues at all” in terms of operating in and out of the country since the handover.

Similarly, the general manager of a resort in Male Atoll also stressed that there had been no disruptions to service.

“Certainly so far there has been no impacts on our arrivals or departures, things seem to have gone smoothly,” the general manager said.

Future direction

When contacted about the future for the airport post-GMR, the President’s Office today told Minivan News that no decision had yet been taken on when – or if – the country would look to tender a new privatisation agreement for the site.

“Nothing of that kind has been decided,” said President’s Office Media Secretary Masood Imad.

Asked as to what action would be taken over the existing structures put in place by GMR before work on its proposed new terminal was halted over a permit dispute earlier this year, Masood questioned why the President’s Office had been contacted over the technical “nitty gritty” of the airport.

“We don’t micromanage all aspects of the airport, these are questions for the Transport Ministry,” he said.

Development conference calls

Meanwhile, the religious Adhaalath Party, which forms part of the government coalition of President Dr Mohamed Waheed Hassan, today called for a national level conference to be held on how INIA should be developed and operated in future.

Speaking at a press conference, party President Sheikh Imran Abdullah told local media that the airport development should not be delayed, calling for a conference to be held to air opinions on how best to proceed in future – not ruling out foreign expertise if needed.

“All people involved in this sector should come together soon for a national conference, the result of which should be a vision of how the airport should be operated in the future,” he was quoted by Sun Online.

Sheikh Imran was not responding to calls from Minivan News at time of press.

In recent months, the Adhaalath Party has been among several key government-aligned parties working to oppose the GMR agreement.

Sheikh Imran has previously predicted there would be “some unrest and damage” should the GMR deal be annulled, but nonetheless urged people to come out and support the calls for nationalisation.  The GMR deal was a 25 year concession agreement, with the airport still belonging to the government.

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Government takes over airport, evicts GMR

Indian infrastructure giant GMR has handed Ibrahim Nasir International Airport (INIA) over to the state-owned Maldives Airports Company Limited (MACL), after the Maldivian government voided the concession agreement and gave it seven days to leave the country.

The sudden eviction of the developer – which won a 25 year concession under the former government to manage and upgrade the airport – scraps the project, which at US$511 million was the single largest foreign investment in the Maldives.

GMR had clung to the terms of its concession agreement while the government fanned growing nationalistic and anti-India sentiment. On November 27, President Mohamed Waheed’s cabinet declared the agreement ‘void ab initio’ – invalid from the outset – and ordered the developer to leave.

With arbitration proceedings already underway in Singapore over the contested airport development charge (ADC), GMR received a stay order on its eviction and appeared confident of its legal position even as the government declared that it would disregard the ruling and proceed with the eviction as planned.

On December 6, a day prior to its eviction, the government successfully appealed the injunction in the Supreme Court of Singapore. Chief Justice Sundaresh Menon declared that “the Maldives government has the power to do what it wants, including expropriating the airport.”

That verdict, effectively legalising the sovereign eviction of foreign investors regardless of contractual termination clauses or pending arbitration proceedings, was “completely unexpected”, according to one GMR insider – “the lawyers are still in shock”.

A last ditch request for a review of the decision was rejected, as was a second attempt at an injunction filed by Axis Bank, GMR’s lender to the value of US$350 million.

Following a meeting with staff yesterday, GMR issued the following statement:

“In deference to the orders of the Court of Appeals, Singapore; GMR Male International Airport Ltd (GMIAL) will facilitate a smooth takeover of the Ibrahim Nasir International Airport (INIA) by the Maldives Airport Company Ltd (MACL), effective midnight tonight.

GMIAL has been assured that as a result of this takeover all its employees, suppliers and other interested parties will not be put to any inconvenience. GMIAL remains committed to finding a suitable solution to this situation. We are taking requisite steps to work out the compensation receivable from the Government of Maldives, keeping in mind the judgement of the aforementioned court and the concession agreement dated 28th June 2010.

All actions as above are without prejudice to our legal rights and statements made before various courts/tribunals where matters are currently being pursued or likely to be taken up.”

An invitation-only press conference to mark the handover was held by Defence and Acting Transport Minister Mohamed Nazim in the airport VIP lounge at midnight. Minivan News understands that GMR did not participate for legal reasons.

During the ceremony, Finance Minister Abdulla Jihad presented the official handover documents to MACL Managing Director Mohamed Ibrahim, and said that the Maldives would pay whatever compensation was required “however difficult”.

Economic Minister Ahmed Mohamed claimed the eviction would enhance investor confidence:

“Investor confidence will only increase when they know that Maldives will do everything in accordance with the law,” Haveeru reported the minister as saying.

Attorney General Azima Shukoor expressed hope that the compensation would be lower than anticipated.

Estimates as to the amount of compensation for which the government is liable have ranged from the US$220-240 million GMR estimated it has already invested, up to US$700 million – a sizeable chunk of the country’s GDP.

Apart from the size of the compensation is the Maldives’ ability to ultimately pay, given the crippled state of its domestic economy.

Finance Minister Jihad in late October warned that the Maldives would be unable to pay government salaries without a promised US$25 million loan from India.

A month later, amid rising anti-India sentiment over the GMR issue and a diplomatic incident triggered by the government’s spokesperson, Jihad described India’s calling in of US$100 million in existing loans as “not a major concern”. The debts, he said, would be paid from the state’s reserves, which local media at the time reported could fall to as low as US$140 million (MVR2.2 billion) once the payments to India were settled.

An International Monetary Fund (IMF) delegation in November warned that the Maldives’ financial reserves “have been declining slowly, [and] now account for just one and a half months of imports, and could be more substantially pressured if major borrowings maturing in the next few months are not rolled over.”

Further pressure on reserves came from a ballooning public debt ratio, “which now stands at over 80 percent of GDP, and has helped to boost national imports, thus worsening dollar shortages in the economy and putting pressure on reserves,” the IMF warned.

Presenting the 2013 budget to parliament in late November, Jihad warned of “bitter consequences” should the spending trend continue.

His target budget deficit of 6.1 percent in 2013 takes into account a raft proposed revenue raising and cost cutting measures which would impact the tourism industry – such a proposed tourism GST increase to 15 percent – and require parliamentary approval.

Further modernisation of the airport – or even completion of the existing upgrade – is likely to require extensive outside assistance or further loans. The rusting foundations of GMR’s new terminal sits on 60 hectares of newly reclaimed land on the airport island, after the government ordered a halt to the development in August. Large sections of the old terminal remain boarded up for construction work, which the government’s ability to proceed with is in doubt.

Further modernisation of the airport is likely to depend on outside assistance. President’s Office Spokesperson Masood Imad told Indian newspaper The Hindu yesterday that after reclaiming the airport, the government would again float a tender for its modernisation “and get more parties in to take the work forward.”

“The tender will be floated by the Maldives government in a transparent manner and after consulting investors. The mistakes made during the float of the tender which has been cancelled will not be repeated,” Imad told the paper.

Environment Minister Dr Mariyam Shakeela has meanwhile separately appealed to China for financial and technical support, telling journalists from the Chinese government’s authorised web portal China.org.cn that the Maldives “needs funds for infrastructure building.”

“We are obviously in need of funds and technical assistance as we do not have the financial means, the technical know-how or the capacity to address these huge climate change issues,” said Mariyam, in an appeal for assistance with climate adaptation.

The government has dismissed speculation Chinese involvement in the development, however Minivan News has learned that senior Chinese military officials landed at the airport in the tense week leading up to the handover, even as India warned of “adverse consequences” should the government proceed with forceful eviction.

India’s reaction after the Singapore Supreme court ruling was muted. Ministry of External Affairs Spokesperson Syed Akbaruddin said the ministry was “studying” the judgement and that their lawyers “need to understand it”.

“There are two issues in the case – one the sovereign right of a nation and other the legality of the agreement, which was linked to compensation to GMR and its associates in Malaysia, he said the latter part has not been “affected or responded” in today’s judgement.

“These issues are not affected with the judgement or not responded to. Fulfilment of all legal process and requirement is what we want to see in this case and we hope that all relevant contracts and agreements would be adhered to and all legal process are carried through,” he said.

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“Maldives can do whatever it wants”: Chief Justice of Singapore

The Supreme Court in Singapore has overturned an injunction blocking the Maldivian government from voiding its concession agreement with GMR and evicting the airport developer by midnight tomorrow.

“The Maldives government has the power to do what it wants, including expropriating the airport,” declared Chief Justice of Singapore, Sundaresh Menon.

The Maldives appealed the stay order which was granted after cabinet on November 27 declared the country’s concession agreement with the developer ‘void ab initio’, or invalid from the outset, and gave the company seven days to hand over the airport to the state-owned Maldives Airports Company Limited (MACL).

The government rejected the injunction, with President Mohamed Waheed’s Special Advisor telling reporters: “I believe that the Singapore court interpreted the law wrong. We cannot wait for a hearing of the appeal. What I am saying is there is no damage to GMR but we face damages by not terminating the agreement.”

GMR dug in its heels, clinging to the injunction, with the backing of the Indian government, which urged the government to take “no arbitrary and coercive measures pending the outcome of the legal process underway.”

CEO of GMR Male International Airport, Andrew Harrison, told Minivan News on Thursday afternoon that it was “too early to say” whether the withdrawal of the injunction meant company was now obliged to hand the airport over to MACL before the deadline on Friday.

“We are waiting to review the full judgement, which is currently being written up. We’ve always been advocates of following the law. We will have a staff briefing tomorrow afternoon,” he said.

MACL meanwhile released two statements claiming that it had met with airlines operating at the airport and advised them that it would be taking over the airport from midnight at December 7. Details of the meeting were not provided.

MACL’s website remains inaccessible a week after it was targeted by Indian hackers, who replaced it with the slogan: “If you don’t know how to secure a website, can you run an Airport securely, MACL?”

GMR held a press briefing for journalists in Delhi yesterday.

Asked about whether GMR had felt the involvement of another country such as China in the development of the Male’ airport, the company’s CFO Sidharth Kapur said “I can’t say that for sure. But, looking at the political situation and political framework in Maldives, I can’t rule out anything.”

GMR had received no response from any attempt to communicate with President Mohamed Waheed, he said.

President’s Office Spokesperson Masood Imad meanwhile told Indian newspaper The Hindu today that after reclaiming the airport, the government would again float a tender for its modernisation “and get more parties in to take the work forward.”

“The tender will be floated by the Maldives government in a transparent manner and after consulting investors. The mistakes made during the float of the tender which has been cancelled will not be repeated,” Imad told the paper.

The Waheed government has previously accused the International Finance Corporation (IFC), a World Bank entity, of being “irresponsible” and “negligent” in advising the former government of President Mohamed Nasheed in the concession of INIA

The IFC has denied the accusations, stating that its advice was geared towards achieving the “objective of upgrading the airport and ensuring compliance with applicable international regulations” and providing the Maldives government “with the maximum possible revenue”.

“A competitive tender was organised with the objective of selecting a world-class, experienced airport operator, who would rehabilitate, develop, operate and maintain the airport,” said an IFC spokesperson, in September.

Environment Minister Dr Mariyam Shakeela has separately appealed to China for financial and technical support, telling journalists from the Chinese government’s authorised web portal China.org.cn that the Maldives “needs funds for infrastructure building.”

“We are obviously in need of funds and technical assistance as we do not have the financial means, the technical know-how or the capacity to address these huge climate change issues,” said Mariyam, in an appeal for assistance with climate adaptation.

Former President Mohamed Nasheed, under whose administration the concession agreement with GMR was signed, called on the government to reconsider its decision to take over the airport and “pull back from the brink and cease its counter-productive behaviour, which is damaging the nation’s economy and bilateral relations.”

Nasheed said the Maldives was “rapidly developing a reputation among foreign investors akin to Zimbabwe, where government might is right and contract law counts for nothing.”

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GMR disputes government’s claims to international media that it had agreed to vacate airport

Indian infrastructure giant GMR has said it “categorically refutes” claims made by the government to international media today that it had agreed to vacate Ibrahim Nasir International Airport (INIA).

The government yesterday dismissed an injunction on GMR’s seven day eviction notice granted by the High Court of Singapore, and vowed that the airport would be run by the state-owned Maldives Airport Company Limited (MACL) by December 7.

A Finance Ministry official said on condition of anonymity that GMR had agreed to vacate following “informal communication.”

“It’s unofficial. They are even selling off their items at a cheaper price. They have given 40-60 percent discounts. They are selling off whatever they can sell off from here including iron bars, concrete, and cement. So I think there won’t be any confrontation or any such nature. All the department heads and senior staff will start working for the Maldives Airports Company Limited MACL from December 7,” the official claimed. “Even though they maintain in public they are not going to vacate, they are going to vacate.”

President’s Office Spokesperson Masood Imad meanwhile told reporters that “Whatever the financial implications on their investments, we have already filed a case in Singapore court for arbitration. We will pay the compensation, what we have to pay.”

However CEO of GMR Male International Airport Limited (GMIAL), Andrew Harrison, said that while GMR had met with a delegation from the government at 11:45am this morning, “we did not agree nor state our willingness to hand over Male’ airport.”

Harrison told Minivan News that he had been advised by a Maldives National Defence Force (MNDF) Colonel at 11:03am that Defence Minister and Acting Transport Minister Mohamed Nazim wished to meet him personally.

“The meeting was attended by the Acting Transport Minister, the Chairman of the Maldives Civil Aviation Authority, our lawyer in the Maldives and three members of the MNDF,” Harrison said, in an emailed account of the meeting.

“The meeting was cordial and the Acting Transport Minister outlined the following: that MACL would be operating the airport from Saturday morning in line with the Government of Maldives communication to GMR-MAHB; that the Minister would like a smooth transition as the airport operations should not be affected or suffer in any way; that passengers should not be inconvenienced and therefore all activities including Duty Free would be allowed to continue as is.”

According to Harrison, Nazim informed GMR that “According to their legal advisors the injunction issued by Singapore High Court does not prevent them from taking over the airport and the injunction cannot be applied to a sovereign state.”

Nazim had furthermore proposed offering “100 percent employment in MACL to all staff currently working for GMIAL and an announcement to that effect made tomorrow by the MACL Board .The offer includes both local and foreign staff at their existing terms and conditions including salary,” Harrison stated.

“Our position, which I communicated to them, remains crystal clear. The Singapore High Court has issued an injunction which clearly prevents MACL or the Government of Maldives or any of its agents from taking any action that interferes with GMIAL operating the airport. The injunction clearly prevents them from taking the action outlined in their notice issued to us stating that the airport would be taken over at the end of the seven day period. We remain resolute in our position and there is no question of an offer being made and certainly no question of any alleged offer being accepted as we will simply not agree to our rights nor the injunction being undermined in any way.”

GMR’s lawyer had advised that the injunction was to be was to be honoured “as their representatives and the Attorney General [Azima Shukoor] were party to those proceedings and were present during the proceedings in the Singapore High Court.”

“Further to this we have issued a communication to their lawyers to confirm that their client (MACL/GoM) will not ignore the injunction and outlining the consequences as well as the disturbing media reports that they will ignore the injunction and take over the airport as planned,” Harrison stated.

Nazim had explained that “as he was not a legal person” he would arrange for a legal team to meet GMR’s representatives tomorrow, and pledged to “maintain dialogue”, Harrison said.

“We will always maintain dialogue but our legal position is very clear and we will not compromise on our legal position which is clearly supported by the injunction.”

Moreover, “any version of the meeting being described any differently to my response is categorically untrue and we maintain that we have been granted the right to continue operating the airport in line with the injunction. There is and has never been any change in our position.”

Harrison added that Nazim had also said that “no force used to take over the airport” and that “media reports that the MNDF would take over the airport are untrue.”

Claims that the company was discounting were true – “in the duty free shop”.

“We have a 40 percent sale in duty free because we are trying to minimise our stock holding,” said Harrison. “It is delighting passengers. But I can categorically state we have no intention of going anywhere.”

Indian industry groups back GMR

The 400,000-member Associated Chambers of Commerce and Industry of India (ASSOCHAM) has meanwhile issued a statement today in support of GMR, warning that “the attitude of Male’ Government, despite the rulings of Singapore High Court, will shake the confidence of the investors and will jeopardise the spirit behind the cooperation of the SAARC nations.”

The industry group appealed to the government to respecting the Singapore judgement, and said it “conveys its displeasure against any unilateral termination of economic agreements, that will be determent to the growth of the nations and might even sow seeds of suspicion amongst the potential investors in all times to come.”

A second industry group, the Confederation of Indian Industry (CII), also issued a statement in support of GMR.

“It is extremely important for all the concerned parties to respect the sanctity of the concession agreement and abide by the provisions provided therein to resolve any dispute within the stipulated legal framework”, said the CII’s Director General, Chandrajit Banerjee.

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Government continues bid to seize airport despite injunction from High Court of Singapore

Additional reporting by Mohamed Naahee

The Maldivian government has dismissed an injunction granted to GMR by the High Court of Singapore, and vowed that the airport will be run by the state-owned Maldives Airport Company Limited (MACL) by the coming Saturday (December 7).

The Singaporean High Court on Monday morning issued an injunction against cabinet’s decision the previous Tuesday to void the concession agreement for the US$511 million project, and issue the developer a seven day eviction notice.

Under the injunction, “Both MACL and the Ministry of Finance and Treasury, pursuant to the notice issued on 27th Nov 2012 either directly or indirectly, are not allowed to interfere with the rights of the Investor (GMR-MAHB consortium) under the concession agreement,” GMR said in a statement today.

The injunction prompted President Mohamed Waheed’s Special Advisor Dr Hassan Saeed, Defense and acting Transport Minister Mohamed Nazim and Home Minister Dr Mohamed Jameel to call a press conference on Monday shortly after midday.

“The government believes that the injunction issued by the Singapore court can be legally contested in a higher court. The government has decided to appeal the injunction as we believe the injunction lacks any grounds to stop the takeover,” said Hassan Saeed.

“I believe that the Singapore court interpreted the law wrong. We cannot wait for a hearing of the appeal. What I am saying is there is no damage to GMR but we face damages by not terminating the agreement,” Saeed said.

“The injunction did not overrule the government’s grounds that the contract was void from the beginning. Neither did it rule against the government’s grounds that the contract was frustrated. As you would know the Civil Court ruling over the ADC made the contract impossible to act upon,” said Saeed, referring to the airport development charge which his own Dhivehi Qaumee Party (DQP) successfully disputed in court while in opposition.

“This is a sovereign country. We have given them a sovereign guarantee. That means the government will compensate for their damages. An injunction cannot be issued like this to a sovereign state,” he continued.

Defense Minister Nazim meanwhile pledged the government would “continue the airport takeover and Insha Allah from next Saturday onwards MACL will be running the airport.”

“The government remains firm and committed towards implementing its decision to terminate the agreement. We will not reconsider it,” he said.

Following the government’s decision to declare the contract void last week, the Immigration Department announced it was halting the renewal of work permits for foreign nationals associated with the project, immediately affecting 17 of the airport’s 140 foreign staff.

The Civil Aviation Authority (CAA) meanwhile informed GMR that it would withdraw the operator’s aerodrome certificate at 23:59 on December 7.

GMR’s Head of Corporate Communications Arun Bhaghat reiterated to Minivan News that the company had no intention of leaving.

“It is not our intention to leave. We hope the government will act according to the law and respect the legal formalities,” he said.

Spokesperson for the International Air Transport Authority (IATA), Albert Tjoeng,  told Minivan News that it was the organisation’s understanding that the airport owner “remains unchanged – it is still the Maldives government.  What is changing is the operator of the airport.”

“The priority is to ensure uninterrupted operations at the airport, with no degradation in safety, efficiency and quality of service,” Tjoeng said.

“It is the responsibility of the civil aviation authority to regulate safety at the airport.  While this is a commercial matter between the government and the airport operator, it should not lead to cost increases for airlines operating to the airport.”

Lawyer acting for GMR, Fayyaz Ismail of Aequitas Legal Consultants (ALC), told Minivan News that if the government failed to comply with the injunction, “the Maldives will no longer be respected as upholding its obligations under international law, which will be very detrimental to future foreign investment. Hopefully they will be reasonable.”

Former President Mohamed Nasheed, under whose administration the contract was signed, declared that “President Waheed cannot ignore international law at his whim and fancy. Rules are rules and they must be respected.”

Lenders write to MACL

Axis Bank, one of the main lenders to the airport development project, has meanwhile sent a letter to MACL dated November 28 in which it reminded the government that the Finance Ministry was the guarantor of the direct agreement “in which the guarantor has undertaken and irrevocably guaranteed to pay any sums due… as a separate and independent obligation notwithstanding any termination of the concession agreement by the grantor or the project company for any reason whatsoever.”

“As a sovereign undertaking by the Republic of Maldives, we are sure that the Ministry of Finance and Treasury shall honour the aforesaid guarantee to repay the Finance Parties, notwithstanding the grounds on which the Ministry has declared he Concession Agreement as void, which has the consequences of terminating the Concession Agreement,” the bank wrote.

“We fear that the taking over of the airport without setting the dues of the Finance Parties shall be detrimental to the interests of the Finance Parties and shall go against the spirit of foreign investment in developmental projects of the Republic of Maldives.”

India considers withdrawing aid, withdraws representative

Indian media has meanwhile reported that the Indian government is considering freezing aid to the economically-crippled archipelago, notably a US$25 million loan necessary for the payment of civil servant salaries and the construction of a police academy.

“We are not happy with the way Maldives cancelled the GMR airport deal. This has surely left an impact on our bilateral ties,” a foreign ministry official told AFP. “A decision whether the money should be given or not will be taken soon.”

However the Indian High Commission told newspaper Haveeru that the suggestion was “unofficial” and that such a decision would not be “unilateral”.

Indian media also reported that High Commissioner D M Mulay had been appointed Indian Consul General in New York, and is to be replaced by Rajiv Shahare.

President’s Office Spokesperson Abbas Adil Riza had described Mulay as a “traitor and enemy of the Maldives and the Maldivian people” during a rally on November 9 calling for the government to “reclaim” Ibrahim Nasir International Airport (INIA) from GMR.

The remarks were widely reported by Indian media, sparking a diplomatic row and forcing the President’s Office to issue a statement distancing itself from the comments.

However Riza subsequently stood by his comments spoke at a second rally, characterising the Indian media coverage of his remarks as a “success” and urging participants to persevere “until GMR leaves this country.”

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Indian hackers take down MACL website as lenders, Malaysian government seek to resolve GMR crisis

Indian hackers have taken over the website of the Maldives Airports Company Limited (MACL), the government company that has ordered the GMR-Malaysia Airports Holdings Berhad (MAHB) consortium to hand over the airport by the end of next week.

The hackers, calling themselves the “Indishell Defacers Team”, replaced the MACL homepage with a black background and a pair of eyes Thursday (November 29) evening, demanding that the Maldives “stop defaming Indian Reputed Companies & learn how to run a website and secure it first.”

“If you don’t know how to secure a website, can you run an Airport securely, MACL?” the hackers added, along with a promise to “do anything for India”.

As of Saturday afternoon, the MACL website remained suspended. MACL CEO Mohamed Ibrahim declined to comment, stating only that he was in a meeting and that the company would “issue media statements from time to time”.

Following the government’s announcement last week that its contract with GMR was void and it would therefore be issuing a seven day ultimatum for the investor to leave the country, MACL claimed that local employees who applied for jobs with the state operator would “have their present basic salary, allowances and other benefits, and training and development opportunities maintained under MACL management.”

The same day, the Immigration Department announced that it would cease renewing the work permits of GMR’s 140 foreign employees, while the Civil Aviation Authority (CAA) sent GMR a letter stating that the operator’s aerodrome certificate – the regulatory authority to operate an airport – would be withdrawn at 11:59pm on December 7.

MACL has also filed a complaint with the Maldives Police Service, alleging that the contract was given to GMR in 2010 “unlawfully”.

GMR has meanwhile stated that it has no intention of leaving without exhausting the legal process and seeking due compensation – the company has stated that it has already invested between US$220-240 million of funds set out for the US$511 million airport development project.

Arbitration proceedings over the contentious airport development charge were already ongoing in Singaporean courts prior to the government’s declaration that the contract was void.

GMR is currently seeking an injunction against its eviction in the Singapore courts, with the next hearing reportedly set for Monday.

Malaysian visit

Meanwhile, Malaysian Foreign Minister Anifah Aman and MAHB Managing Director Basir Ahmed visited the Maldives on Friday to try and resolve the situation.

Aman told local media at the airport that his discussion with Maldivian Foreign Minister Dr Abdul Samad Abdulla was “fruitful”.

“As we are two friendly nations, there is no reason why this matter cannot be resolved,” Aman was reported as stating by Haveeru.

The reaction from the Indian government and industry groups has been substantially less prosaic.

The Associated Chambers of Commerce and Industry of India (ASSOCHAM), expressed “serious concern over the unilateral decision of the Maldives government” and the “violation” of the country’s concession agreement with GMR.

The chamber of commerce group urged the Indian government “to take immediate steps as may be necessary to protect the interests of GMR, its people working in Male’ as well as the Indian banks against such irrational moves.”

Lenders to GMR, including the lead underwriter Axis Bank, Indian Overseas Bank and the Indian Bank have meanwhile written to the Maldives government demanding that their interests be protected. US$368 of the US$511 million project is a loan component, most of it financed by Indian companies.

The Indian government is meanwhile reported to be reconsidering its bilateral aid assistance to the Maldives.

A succession of Indian loans have been crucial to the Maldives’ ability to pay its operating costs, including civil servant salaries.

Days prior to the government’s decision to void the GMR agreement, India had requested repayment of US$100 million in treasury bonds by February 2013.

A further US$25 million state loan from India was found to have been delayed after the Maldivian government failed to submit the requested paperwork, according to an Indian diplomatic source.

Overall Indian aid to the Maldives has totalled MVR 5 billion (US$324 million) over the last three years, according to official statistics from the Indian High Commission released in May.

In additional to credit facilities, purchase of bonds and provision of equipment and financial assistance, India provided the government substantial aid to hold the SAARC Summit in Addu Atoll last year.

In the last three years, India funded the construction of the Faculty of Tourism and Hospitality, provided US$4.5 million for the development of Indira Gandhi Memorial Hospital (IGMH), US$25 million for a police academy, US$9 million for police vehicles, US$1.5 million for a coastal management centre, US$1 million for the purchase of pharmaceuticals and sports equipment, US$5.3 million for the Institute of Information Technology, and most recently, the construction of a military hospital for the Maldives National Defence Force (MNDF).

Credit facilities of US$40 million were provided for the construction of 500 housing units, while the State Bank of India (SBI) had spent US$100 million of treasury bonds (with a further US$100 as standby credit). India also provided US$28 million for the development of human resources in the Maldives.

Moreover, a substantial amount of private lending to the resort industry development takes place through Indian banking institutions active in the country, most notably SBI, and a significant quantity of food to the import-dependent Maldives (including basics provisions such as eggs) is supplied through trade concessions with India.

India has also provided extensive military support to the Maldives, including supplying vehicles and a helicopter.

“An impact on ties is inevitable,” Indian newspaper The Hindu reported a senior Indian government source as stating, after last week’s decision by the Maldivian cabinet to evict GMR.

“For the time being, we have to consider how things stand and how to proceed,” an official source told the paper, “when asked whether India would continue assisting the Maldives in combating its financial difficulties, including paying salaries to civil servants and shoring up the surveillance and reconnaissance ability of its security forces.”

“Stability can come only after elections. All of them [political parties] are looking for some cause célèbre. GMR has unwittingly become a major political issue in the Maldives,” an official source told the paper.

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High Court of Singapore upholds injunction against MACL, blocking action over ADC in Maldives’ Civil Court

The High Court of Singapore has rejected an attempt by the Maldives Airports Company Limited (MACL) to release an injunction blocking the government from taking action in the Civil Court of Maldives blocking GMR’s offset of the airport development charge (ADC).

MACL is the government party in the concession agreement with Indian infrastructure giant GMR to manage and develop Ibrahim Nasir International Airport, signed during the Nasheed administration.

Opposition parties at the time the agreement was signed – and are now in government following February 7’s controversial transfer of power – first opposed GMR’s development of the airport on nationalistic grounds, and then levelled numerous allegations against the company ranging from corruption to concerns that the deal would allow Israeli bombers to refuel en route to bombing Arab countries.

The opposition had some success in disrupting the agreement in late 2011, after the Dhivehi Qaumee Party (DQP) won a case in the Civil Court blocking GMR from levying an airport development charge (ADC) as stipulated in its concession agreement.

MACL in a letter sent on January 5, 2012, instructed GMR to deduct the ADC revenues from the concession fees due the government, while it sought to appeal the Civil Court ruling. However the Nasheed government fell a month later and the opposition inherited the problem, receiving 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.

“The net result of this is that the Maldivian government now has to pay GMR for running the airport. On this basis it is likely that the Maldivian government will end up paying about MVR 8 billion (US$519 million) to GMR for the duration of the contract,” wrote Dr Hassan Saeed, President Mohamed Waheed’s Special Advisor, in a recent appeal to Indian Prime Minister Manmohan Singh calling on him to cancel the Maldives’ agreement with GMR.

Saeed is the leader of the DQP, the party that filed the case against the ADC while in opposition, and has strongly opposed GMR’s involvement in the airport development.

As per the concession agreement, the ADC matter was referred to the Singapore Court of Arbitration.

The High Court of Singapore on July 23 granted an injunction in favor of GMR, restraining MACL from taking any step in the Civil Courts of the Maldives preventing the company “from adjustment/set-off of the Airport Development Charge and insurance surcharge, as per MACL’s 5th January 2012 letter, which is now referred to arbitration,” according to the airport operator.

MACL approached the High Court of Singapore in October 2012 seeking to have the injunction lifted. However the court dismissed the application on November 19.

MACL has challenged the validity of the July 5 letter instructing GMR to deduct the ADC from its concession revenues, claiming that it was signed by the former MACL Chairman ‘Bandhu’ Ibrahim Saleem without approval from the company’s board, and noted that he had been subsequently replaced under the new administration.

“The dispute raised by MACL on the validity of the 5th January 2012 letter will be decided in the arbitration proceedings to be held in Singapore,” GMR noted in a statement.

Attorney General (AG) Aishath Azima Shakoor claimed in local newspaper Haveeru on Monday that the Singaporean court had permitted MACL to try the matter in a Maldivian court, and allow the company to sue Saleem for the loss of revenue caused by the July 5 letter.

“But in accordance with the agreement whether MACL had the right to ignore or comply with the letter would be decided by arbitration. Even if a Maldivian Court rules the letter as null and void it would not binding for the arbitration,” Azima was reported as telling the paper.

There was, she said, no impediment to the government terminating the GMR agreement altogether, although this would be subject to compensation payable to GMR to be decided through arbitration.

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