airport – Page 6 – Minivan News

Indian investors concerned about government’s political interference: Business Standard

Indian companies operating in the Maldives are expressing concerns over political interference they claim is derailing their substantial investments in the country, reports India’s Business Standard publication.

Officials involved in the Apex Realty housing development project – a joint venture between developers SG18 and Indian super-conglomerate TATA – told the Standard that the government was attempting to take over the site in Male’ given to the company, with the intention of building a new Supreme Court.

After being elected in 2008, former President Mohamed Nasheed moved the Supreme Court into the opulent palace of his predecessor, Maumoon Abdul Gayoom, opting for the less lavish building of Muleaage as the Presidential residence.

“A recent meeting held with the Maldivian Housing Minister is said to have ended abruptly with officials from the firm and the Indian High Commission being asked to leave,” the Standard reported.

President Mohamed Waheed’s Media Secretary, Masood Imad, confirmed to the publication that the meeting had taken place, and said the minister had given them time, even though it was “unannounced”.

“I am told that the meeting continued for about an hour. TATA Housing officials were raising issues that were not in the contract but the Minister accommodated most of the issues. Most of the issues discussed were procedural,” Masood was reported as saying.

A source involved in the deal confirmed to Minivan News that the government had offered land in Hulhumale’ to the developers as an alternative to the agreed site in Male’. However, the same source said the developers felt the change would affect the financing of the project.

Minivan News was awaiting a response from the Indian High Commission at time of press.

GMR grievance

Indian infrastructure giant GMR has also raised concerns about the new government’s handling of its concession agreement to manage and develop Ibrahim Nasir International Airport (INIA), signed with the former administration.

The company has previously sought to downplay its issues with the government in the media, however “public statements and press conferences of some government ministers and coalition party leaders are clearly aimed at arousing public sentiments against GMR and creating undue challenges for us,” the company told the Standard.

“To gain political advantage, some elements of the government itself have started hampering the smooth functioning and development of the airport,” the company added.

Moreover, the government was passing new laws and policies that were harming its interests.

“GMR was granted required approvals and licenses to operate Arrival Duty Free on December 30, 2011. We made huge investments in development of arrival duty free area. However, the government later revoked the licence citing that earlier the licence was given in error,” the company told the Standard.

“Similarly, On April 23, 2012, the GoM (Government of Maldives) passed an amendment to Business Registration Bill to restrict any foreigner to carry on Duty Free business, cargo clearance business, and bonded warehouse business at the airport. This step is clearly directed against GMR.”

The comments follow a US$2.2 million bill handed to the government’s side of the airport contract – the Maldives Airports Company Limited (MACL) – following a third quarter in which the airport developer deducted its contractually-mandated airport development charge (ADC) from concession fees due the state.

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 US$25 ADC, stipulated in the developer’s concession agreement signed with the Nasheed government, was to be levied on all outgoing passengers at INIA.

However, the former opposition Dhivehi Qaumee Party (DQP) – now part of the coalition government – in late 2011 filed a successful case in the Civil Court challenging the legality of the charge on the grounds that it was a tax not approved by parliament.

Nasheed’s government instructed MACL to deduct the ADC from the concession fees due the government while it sought to appeal. However soon afterwards Nasheed resigned in controversial circumstances, handing power to his Vice President, who swiftly replaced much of the government with appointments from the former opposition.

Speaking to the Standard, Masood said that the government “will not target any investment, Indian or otherwise unduly. The assurances given by the President securing foreign investments in Maldives are valid and stand true.”

However Attorney General Azima Shukoor told media this morning that “After the necessary research, we have said that the GMR agreement causes financial loss to the state.”

She expressed confidence that the government would win the case in the Singapore court of arbitration, the next hearing of which is to be held on November 19.

“I would like to point out that the Anti-Corruption Commission (ACC) still hasn’t finished the complete investigation into the GMR matter. This also presents difficulties for us, she said.

“I have met with the heads of ACC and Auditor General two, three times. I can’t say anything about the investigations. But I haven’t heard back anything after I shared the information I had available with them.”

Other elements of the government have also persistently called for the airport’s nationalisation.

DQP Leader Dr Hassan Saeed, now Waheed’s Special Advisor, at the launch of a book (in Dhivehi) last month criticising the airport development, said that the “only way to reclaim the airport from GMR” was to invalidate or cancel the concession agreement.

Home Minister Dr Mohamed Jameel – also a DQP member – said at the launch that it was the “duty of the most capable people in the country” to step forward and help “liberate” the nation from “grave problems” during the current “difficult times”.

The religious Adhaalath Party, likewise aligned with the current government – in September called for a “national jihad” to nationalise the airport development.

Another government-aligned party, the Jumhoree Party (JP) headed by resort tycoon, media owner and member of the Judicial Services Commission (JSC) Gasim Ibrahim, has also called for the nationalisaiton of the airport.

In September Gasim urged the government in to reclaim the airport, even at a cost of US$700 million, as it was worth “a thousand times more”.

Gasim’s comments followed GMR’s decision to suspend the credit facility for his Villa Air airline, due to unpaid bills totaling MVR 17 million (US$1.1 million) for fuel, ground handling and passenger service fees.

In late September GMR sponsored the inaugural Maldives Travel Awards, held on Gasim’s Paradise Island resort.

Paradise won the title of ‘Leading Business Hotel’, while Gasim’s Villa group of companies also picked up an award for ‘Leading Domestic Airport’. Gasim himself received a ‘Lifetime Achievement’ award.

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“We will celebrate liberation of airport on February 7”: Sheikh Imran

Adhaalath Party President Sheikh Imran Adbulla has said that the people of the Maldives will celebrate the liberation of Ibrahim Nasir International Airport (INIA) on the first anniversary of the resignation of the previous government – February 7, 2013, local media has reported.

The comments were made at a press conference held by a coalition of NGOs and political parties opposed to the deal with the Indian infrastructure company GMR – signed by former President Mohamed Nasheed’s administration – to develop and manage the country’s international airport.

Imran predicted there would be “some unrest and damage” on the day the deal is annulled, but urged people to come out and support the calls for nationalisation – although the GMR deal is actually a 25 year lease arrangement and the airport still belongs to the government.

Minivan News was unable to gain further comment from the Adhaalath Party members at the time of press.

Imran said the Maldivian population would be able to endure economic hardship should the deal be annulled, before threatening “a completely different activity” should the government fail to resolve the issue to the coalition’s satisfaction.

“February 7 this year should suffice to make this clear [to the government],” Imran was quoted as saying by Haveeru.

“We were talking about a particular thing and a particular person completed it. Therefore, when the Maldivian people carry out these activities, too, in a certain way, the people who completes it will decide it a certain way. I hope the President has the courage, ability and steadfastness to take such a measure on behalf of the people,” he continued.

Imran’s comments are symptomatic of the incendiary rhetoric surrounding the airport, the nationalisation of which the Adhaalath Party has previously described as a “national jihad”.

The Civil Coalition of NGOs joined with the seven now-government aligned parties to campaign against the former Maldivian Democratic Party (MDP) led administration, most famously gathering on December 23 last year to defend Islam against what it perceived as irreligious tendencies in the Nasheed government.

The Coalition explained that it was to conduct a week of activities between November 3 – 9 in opposition to the deal, referred to as “airport week”, rather than the mass protest that had previously been planned.

Sun Online reported that the decision had been made owing to clashes with school exams and the government’s plans to celebrate the anniversary of 1988’s attempted coup on November 3.

The paper also reported that the week would be accompanied by the launching of songs and a special logo in support of the movement.

A large balloon has appeared in recent days over the skies of Male’ reading “GMR go home.”

However, previous attempts to organise demonstrations in opposition to the development met with disappointing results when a September protest was poorly attended.

One government-aligned party, the Dhivehi Rayyithunge Party (DRP), refused to join the September protest, arguing that the dispute ought to be resolved through the courts.

DRP leader Ahmed Thasmeen Ali has previously expressed his concerns that reneging on the GMR deal might have detrimental effects on investor confidence in what is already a perilous financial situation for the Maldives.

Abdulla Jabir, Deputy Leader of the Jumhoree Party (JP), has also been vocal about the economic impact of politicising the deal, criticising the Adhaalath Party.

“Sometimes they are religious experts, sometimes they are financial experts. But everyone loves Islam here. Right now, foreign investors are finding it difficult to understand the climate here,” Jabir told Minivan News earlier this month.

“This is not a perfect time for this issue to be happening with GMR,” he added. “I think these protests [against GMR] are unrealistic.”

The JP were, however, represented at the press conference, with State Minister for Fisheries and Agriculture Fuad Gasim reportedly suggesting that senior government figures were being pressured into silence over the deal.

Official government opposition to the deal is currently taking the form of investigations of the $511million deal via the country’s Anti Corruption Commission (ACC) as well as through a Singapore court of arbitration as agreed in the original contract.

However, the Attorney General has asked the Supreme Court to rule on whether the matter might be dealt with within the Maldivian court system.

Earlier this month, INIA CEO Andrew Harrison told Indian media that the company had received no official word from the Maldivian government concerning a resolution to the dispute.

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‘Sun Travel’ Shiyam claims investors have “lost confidence” in the Maldives

MP for Meedhoo constituency Ahmed ‘Sun Travel’ Shiyam told the People’s Majlis that both local and foreign investors had lost confidence in the Maldives, local media reported.

“This is the result of the persons assigned with the people’s posts and money betraying them and acting without any policies or system,” Haveeru quoted Shiyam.

Shiyam argued that increasing embezzlement and corruption was a major contributor to what he sees as the country’s impending bankruptcy.

“In order to ensure the progress of the country, everyone needs to be sincere and honorable. The members of the Parliament and the government must adore the people,” he said.

Investor confidence has been much discussed as the government continues to oppose the GMR deal to develop the country’s international airport – the country’s largest.

However, the Maldives National Chamber of Commerce and Industries (MNCCI) last week claimed that the legal wrangling between the government and India-based developer would not harm confidence in the country’s “challenging” investment climate.

Haveeru also reported comments made today by former President Maumoon Abdul Gayoom regarding the GMR deal.

Detailing his recent meeting in India with GMR head G M Rao, Gayoom said that he had told Rao that the deal had been signed under dubious circumstances.

“I told him that we have no issues with India or any Indian company. We have issues with the actions of the previous government,” Gayoom is reported to have said.

“The agreement was signed with GMR in violation of the constitution and the laws. The Parliament was not even informed. The Maldivian people are also not aware of the details of the agreement. So these are the issues we have,” he said.

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GMR presents government with US$1.5 million bill for Q2, as ADC dispute sent for arbitration

An ongoing dispute between Ibrahim Nasir International Airport (INIA) developer GMR and the incumbent Maldivian government concerning a US$25 Airport Development Charge (ADC) has been referred to a court of arbitration in Singapore.

The government-owned Maldives Airports Company Limited (MACL) faces a US$1.5 million shortfall in concession fees owed to the airport developer for the second quarter of 2012; the legacy of an opposition-sponsored Civil Court case in late 2011 that scuttled the airport’s ability to charge the ADC as stipulated in its concession agreement.

GMR signed a 25 year concession agreement with former President Mohamed Nasheed’s government to upgrade and manage Ibrahim Nasir International Airport (INIA). Under the concession agreement, a US$25 Airport Development Charge (ADC) was to be levied on all outgoing passengers to part-fund the US$400 million development – the country’s single largest private investment.

However, while in opposition, the Dhivehi Qaumee Party (DQP), led by Dr Hassan Saeed, now President Dr Mohamed Waheed’s special advisor, and Dr Mohamed Jameel, now Home Minister, filed a successful case in the Civil Court in December 2011 blocking payment of the ADC on the grounds that it was effectively a tax not approved by parliament.

Nasheed’s government as a stopgap measure agreed to deduct the ADC from the concession fees payable by GMR, while it sought to appeal to verdict.

As a result, Dr Waheed’s government received only US$525,355 from the airport for the first quarter of 2012, compared to the US$8.7 million it was expecting, at time the country is facing a crippling budget deficit, a foreign currency shortage, plummeting investor confidence, spiraling expenditure, and a drop off in foreign aid.

According to financial statements sent to MACL and released to local media, in the second quarter of 2012, GMR deducted the ADC revenue of US$7.1 million from total revenues of US$5.6 million, leaving the government with a bill for US$1.5 million.

Managing Director of MACL Mohamed Ibrahim told local newspaper Haveeru that the government would not pay the amount, alleging that GMR’s deduction of the ADC from the revenue was illegal.

In its defence, MACL has said that its board of directors had been reformed with the arrival of the new government, and a decision made to annul the old board’s agreement to deduct the ADC revenue.

The government meanwhile sought to invalidate the GMR contract – and the clause invoking arbitration – by challenging the handling of the bidding process by the International Finance Corporation (IFC), a member of the World Bank group and the largest global institution focused on private development sector in developing countries.

“The advisory work was supported by AusAid (Australia), the Ministry of Foreign Affairs of the Netherlands, and DevCo. DevCo is a multi-donor program affiliated with the Private Infrastructure Development Group and funded by the UK’s Department for International Development, the Ministry of Foreign Affairs of the Netherlands, the Swedish International Development Agency, and the Austrian Development Agency,” the IFC explained, following a visit by the delegation in June to address the government’s concerns.

Following the first quarter deduction, GMR announced an employee benefits scheme converting 50 percent of employee salaries to US dollars from July onwards, and a one-percent profit-share.

Around the same time, the company sought to compromise with government by offering to exempt Maldivian citizens from paying the ADC. However, the Transport Ministry continued to demand that the infrastructure giant repay the US$8.2 million deducted.

Several pro-government parties – including the Dhivehi Rayithunge Party (DRP), Dhivehi Qaumee Party (DQP), People’s Alliance (PA) and Jumhoree Party (JP) – meanwhile advised President Waheed that they continued to endorse an agreement signed in June 2010 calling for the airport to be taken back from GMR and nationalised.

The relationship between the airport developer and the government soured further last week after the government temporarily called for a halt to work on the new airport terminal, alleging it had “violated rules and regulations” by not acquiring certain permissions from the Civil Aviation Authority.

“When the government decides that a project be stopped, we will make sure this happens,” President’s Office Spokesperson Abbas Adil Riza previously told Minivan News. “GMR have not discussed the construction with relevant authorities.”

Following the second quarter deduction, the airport developer declined to comment, as the matter “has been referred for arbitration by the parties.”

“GMR Male’ International Airport Pvt Ltd has made the said adjustment as per the concession agreement,” a spokesperson said.

The concession agreement includes an option for the government to buy out the contract from the developer, however the cost is likely to reach upwards of several hundred million dollars.

President’s Office Spokespersons Abbas Adil Riza and Masood Imad had not responded at time of press.

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ACC wades into airport development charge debate

The Anti-Corruption Commission (ACC) has issued a statement in support of the government’s bid to obtain concession fees lost due to the legal debacle surrounding the levying of an airport development charge (ADC) by airport developer GMR.

A Civil Court case filed by the then opposition Dhivehi Qaumee Party (DQP) late last year ruled against the charging of an ADC, as stipulated in GMR’s contract with the government-owned Maldives Airports Company Limited (MACL).

The court decision compelled the then-ruling Maldivian Democratic Party (MDP) to deduct the ADC charges from the concession fees due the government, which was pending appeal prior to the change of government under controversial circumstances on February 7.

However as a result of the DQP’s successful court case while it was in opposition, the government only received US$525,355 out of an expected US$8.7 million in concession fees for the first quarter of 2012.

The Transport Ministry has maintained that the former government’s decision to deduct the fee was illegitimate, initially claiming the authorisation letter was invalid as the new government had reappointed the MACL board, and insisted GMR pay the concession fees due. GMR has maintained that the ADC is chargeable under the terms of its concession agreement, and offered to exempt Maldivian nationals from paying the fee.

In its statement last week, the ACC claimed that according to article 9 of the Public Finance Act, the Finance Minister was not authorised to forgo revenue to the state without submitting the figures to the President under guidelines set by the Auditor General.

The ACC statement alleged that former MACL Chairman ‘Bandhu’ Ibrahim Saleem agreed to deduct the ADC and insurance surcharge without approval from the company’s board. As all three stakeholders had not signed the changes to the agreement, it could not be considered legally binding, the ACC claimed.

The ACC contended that the clauses in the concession agreement (18.2 and 18.3) that allow changes to the contract under certain political circumstances could not be activated as the Civil Court ruling was not a political decision, despite the case being filed by a political party.

That case was filed by DQP in a long-standing campaign against Nasheed’s government awarding the airport redevelopment to GMR. DQP leader Dr Hassan Saeed is now President Mohamed Waheed Hassan’s special advisor, while DQP Vice-President Dr Mohamed Jameel is the new Home Minister.

A 24-page book released by the DQP while it was in opposition presents the government’s lease of Ibrahim Nasir International Airport (INIA) to developer GMR as a threat to local industry that will “enslave the nation and its economy”.

Former President’s Office Press Secretary Mohamed Zuhair at the time of the pamphlet’s publication said that he felt the title’s wording was “very strong”, and drew a faulty comparison between international cooperation for mutual benefit and foreign occupation of a people and market for selfish purposes.

“The purpose of all this is to make Maldivians mistakenly feel like they are under occupation and the country is being sold out,” claimed Zuhair at the time.

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GMR offers to exempt Maldivian nationals from airport development charge

GMR has offered to exempt Maldivian nationals from paying the contentious Airport Development Charge (ADC), in a bid to end a legal and contractual stalemate that threatens to bankrupt the Maldives Airport Company Limited (MACL) and deprive the government of the majority of all airport revenue.

The Indian infrastructure giant signed a 25 year concession agreement with former President Mohamed Nasheed’s government to upgrade and manage Ibrahim Nasir International Airport (INIA). Under the concession agreement, a US$25 charge was to be levied on all outgoing passengers to part-fund the US$400 million upgrade.

However while in opposition the Dhivehi Qaumee Party (DQP), led by Dr Hassan Saeed, now President Dr Mohamed Waheed’s special advisor, filed a successful case in the Civil Court in December 2011 to block the payment of the charge, on the grounds that it was effectively a tax not approved by parliament.

Nasheed’s government had agreed to deduct the ADC from the concession fees payable by GMR while it sought to appeal to verdict. As a result, Dr Waheed’s government received only US$525,355 from the airport for the quarter, compared to the US$8.7 million it was expecting.

In a statement today, GMR said the government had “expressed a desire to exempt Maldivian citizens from the ADC”, as “the majority of Maldivians travel abroad for the purposes for healthcare and education.”

“The ADC was conceptualised and incorporated into the concession agreement by the government to yield a maximum return to the Maldives while ensuring development of the airport and a reasonable return to the successful bidder,” GMR stated.

“We are sensitive to the apprehensions expressed regarding ADC; and would like to assure all concerned that the management of GMR Male International Airport is doing everything possible by offering viable options to reduce the impact on the Maldivians, thereby helping the government for the ADC implementation.”

GMR presented the government with two options:

Option 1: No Maldivian passport holder will have to pay ADC. Every departing foreign passenger will pay an ADC of US$28.00; or
Option 2: Maldivians travelling to SAARC countries will not have to pay any ADC. Every Maldivian Passport holder departing to countries other than SAARC and every foreign passenger will pay an ADC of US$27.00.

No fee would be charged to either Maldivians or foreigners using the domestic terminal, the company noted.

In the statement, GMR noted that the government received US$33 million in 2011 from airport concession fees, “three times the money the government ever made in a year [from the airport] before privatisation.”

Following construction of the new terminal in 2015 – including “a state-of-the-art 600,000 square foot integrated Passenger Terminal and a 20,000 square foot VIP terminal, and various other airside and landside developments,” expected revenue from the airport to the government was expected to reach US$50 million per year, GMR observed, and almost US$100 million from 2021 as passenger numbers increased.

“In effect, GMIAL’s contribution to the government would be over US$2 billion over the concession period of 25 years, which will make a very significant contribution to the economy of the Maldives.”

President’s Office Spokesperson Abbas Adil Riza said the government had not yet officially received details of the offer, but said that such an offer would be evaluated by the Attorney General’s office “to see whether it is in line with the Financial Regulation Act.”

Attorney General Azima Shakoor was yesterday reported as expressing concern that settling the issue would be “quite difficult”, but vowed that “the government would settle the issue for the benefit of the country.”

On May 2 President Dr Mohamed Waheed told media at the inauguration of the Civil Air Navigation Services Organisation (CANSO): “I do not believe [the ADC] can be charged in the current situation because of the court’s decision.”

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Two drunk Maldivians arrested in Colombo for harassment during Sri Lankan Airlines flight

Two Maldivians were arrested at Colombo Airport after they boarded a Sri Lankan Airlines flight drunk and violently harassed passengers and cabin crew during the flight, reports Sri Lanka’s ‘Daily Mirror’ newspaper.

Sri Lankan police told the paper that the two Maldivians were under the influence of liquor and were apprehended by the Katunayake police for behaving in an unruly manner.

“The two suspects acted violently, harassing the passengers and crew following the flight’s departure from Bangkok late last night,” the paper reported. “Soon after the landing at the Bandaranaike International Airport in Katunayake, the two suspects were taken into police custody and they were to be produced before the Magistrate shortly.”

Maldivian newspaper ‘Haveeru’ has also reported the same incident and identified the pair as Hanif Mushaf and Washeed Ibrahim.

Haveeru quoted a senior Sri Lankan police officer as saying that the two Maldivian nationals tried to manhandle the cabin crew and passengers.

The cabin crew reportedly warned the two Maldivians to calm down, the paper reported.

Maldives Police Sub-Inspector Hassan Haneef told Minivan News that he had heard about the incident through the media but could not yet confirm the arrest.

First Secretary at the Maldivian Embassy in Srilanka Ahmed Mujthaba was not responding to calls at the time of going to press.

The Sri Lankan Airlines office in Male’ was closed for the public holiday.

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GMR deducts US$8.1 million from concession fees for 2012 first quarter

Indian infrastructure giant GMR, appointed by former President Mohamed Nasheed’s administration to manage and develop of the Ibrahim Nasir International Airport (INIA), has deducted US$8.1 million from concession fees paid to the government for the first quarter of 2012.

GMR took over the management of INIA from the government-owned company Maldives Airports Company Limited (MACL) in September 2010. According to a statement from the MACL, the company 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 payment for airport development fees and insurance surcharge.

The Airport Development Charge (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.

However the then-opposition Dhivehi Qaumee Party (DQP), which had ardently opposed the handing of the airport to GMR, won a case in the Civil Court last year blocking GMR from charging the ADC.

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.

Following the court ruling former President Nasheed’s administration agreed that the ADC would have to be deducted from GMR’s concession fee paid to the MACL.

Managing Director of MACL Mohamed Ibrahim told Minivan News the company would not comment on the matter.

GMR paid MACL US$ 7.79 million in variable annual concession and fuel concession fees for the fourth quarter of 2011, after deducting US$ 100,000 as payment for insurance surcharge.

New Finance Minister Abdulla Jihad has previously said the ADC issue will bankrupt the MACL.

“I don’t believe that GMR can deduct that amount from the payment owed to the government. The estimated US$30 million for this year must be paid. If the payment is not received it would be difficult to run the Airports Company,” Jihad said.

“The Civil Court ruled against that charge. Hence that amount must not be deducted from the payment to the government which would reduce its income,” Jihad argued. ”The Airports Company might face losses if that happens,” he said.

Meanwhile, new Foreign Minister Dr Abdul Samad Abdulla assured his Indian counterpart that all existing investment agreements would be honoured despite the change of government on February 7.

According to Indian newspaper The Hindu, Samad assured Indian External Affairs Minister S.M. Krishna that the government’s policy was unchanged, after his counterpart expressed the desire that the Maldives remained friendly to outside investors.

Longstanding opposition

The contentious Civil Court case was filed by DQP in a longstanding campaign against Nasheed’s government awarding the airport redevelopment to GMR. DQP leader Dr Hassan Saeed is now President Mohamed Waheed Hassan’s special advisor, while DQP Vice-President Dr Mohamed Jameel is the new Home Minister.

Former President’s Office Press Secretary Mohamed Zuhair at the time of the pamphlet’s publication said that he felt the title’s wording was “very strong”, and drew a faulty comparison between international cooperation for mutual benefit and foreign occupation of a people and market for selfish purposes.

“The purpose of all this is to make Maldivians mistakenly feel like they are under occupation and the country is being sold out,” said Zuhair, who pointed out that the government “wouldn’t have gone out for an international bid [on the airport project] if there was a way to borrow money and do it internally.”

He explained that the airport now yields “a bulk” of the national revenue, in dollars: “If foreign visitors increase, income increases. It’s simple math.”

GMR has also drawn the ire of local company MVK Maldives Pvt Ltd after INIA, backed by a civil court ruling, refused to renew MVK’s lease and ordered the MVK to vacate the Alpha MVKB Duty Free shop and hand the premises to GMR.

Consequently, DQP MP Riyaz Rasheed submitted a resolution to the Majlis to prevent GMR from taking over the management of duty free shops and bonded warehouses from local businesses. However, Rasheed withdrew the resolution on April 2.

The decision to finalise a deal to develop Ibrahim Nasir International Airport (INIA) was agreed under the administration of former President Mohamed Nasheed in 2010. GMR emerged victorious in the bidding process, amid political opposition on largely nationalistic grounds.

Confidence in GMR’s $511 million dollar INIA project appeared to take a hit after the resignation of President Nasheed in February was accompanied by a five percent drop in GMR’s share prices before bouncing back shortly after.

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ADC issue will bankrupt Maldives Airports Company: Finance Minister Jihad

Finance Minister Abdulla Jihad has declared that the Maldives Airport Company Limited (MACL) is unable to pay the disputed airport development tax (ADC) without risking bankruptcy.

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 Indian infrastructure giant GMR in 2010. The anticipated US$25 million the charge would raise was to go towards the cost of renovating INIA’s infrastructure.

The ADC was to be charged after midnight on January 1, 2012, however the Civil Court blocked the fee on the grounds that it was essentially the same as a pre-existing Airport Services Charge (ASC). Following the court ruling the Nasheed government agreed that the ADC be deducted from its concession fee paid to the government-owned company in charge of the airport, Maldives Airport Company Limited (MACL).

On Monday however, new Finance Minister Abdulla Jihad told local newspaper Haveeru that MACL should not and could not cover the development costs.

“The Civil Court ruled against that charge. Hence that amount must not be deducted from the payment to the government which would reduce its income,” Jihad argued. “The Airports Company might face losses if that happens,” he said.

Speaking to Minivan News, Jihad said the next step was to ask GMR to resolve the issue after the board of MACL was reappointed.

“The new board will write to GMR… It is not for the Finance Ministry to interfere with the running of the [airport] company,” said Jihad.

He also claimed that he did not feel there were any specific provisions in the original deal detailing the collection of the ADC.

In a statement following the court decision, GMR stated that it “has been permitted to collect ADC and Insurance charge under the Concession Agreement signed between GMR-MAHB, Maldives Airport Company Limited (MACL) and The Republic of Maldives (acting by and through its Ministry of Finance and Treasury), and as such has set up processes for ADC collection from 1st January 2012 supported by an information campaign to ensure adequate awareness.”

CEO of INIA Andrew Harrison said that the company was unwilling to comment on the “sensitive” issue at this point.

Meanwhile, Foreign Minister Dr Abdul Samad Abdulla in assured his Indian counterpart that all existing investment agreements would be honoured.

According to the Indian newspaper, the Hindu, Samad assured Indian External Affairs Minister S.M. Krishna that the government’s policy was unchanged, after his counterpart expressed the desire that the Maldives remained friendly to outside investors.

Longstanding opposition

The contentious Civil Court case was filed by the then-opposition Dhivehi Qaumee Party (DQP), now part of the ruling coalition, in a longstanding campaign against Nasheed’s government awarding the airport redevelopment to GMR. DQP leader Dr Hassan Saeed is now President Mohamed Waheed Hassan’s special advisor, while DQP Vice-President Dr Mohamed Jameel is the new Home Minister.

Umar Naseer, now the deputy leader of the ruling coalition party the Progressive Party of Maldives (PPM), previously announced his intention to re-nationalise the airport should his party come to power. Naseer also contended that the airport deal would allow “Israeli flights to come and stop over [in the Maldives] after bombing Arab countries”.

The DQP campaigned vigorously against the deal, producing a pamphlet last December titled “Handing the airport to GMR: The beginning of slavery”, in which it criticised the arrangement with GMR.

In the document, the party argued that deal would allow the Indian company to “colonise” the local economy to the detriment of Maldivians. The DQP also questioned the legality of the deal, taking the issue of the ADC to the civil courts.

The document further alleged that the deal did not make adequate provision for replacing the runway, the condition of which has come under increasing criticism.

Head of the DQP Dr Hassan Saeed today said he was unable to comment on recent developments regarding GMR and the ADC.

The ADC was ruled by the court to be a new tax and was subsequently required to go through the People’s Majlis.

In light of this decision, GMR agreed with the Nasheed government in January that it would deduct the $25 per passenger fee from the concessionary charge paid each quarter to MACL. At the time the government acknowledged the compromise to be a temporary whilt maintaining its commitment to ADC in some form.

Confidence in GMR’s $511 million dollar INIA project appeared to take a hit after the the resignation of President Nasheed in February was accompanied by a five percent drop in GMR’s share prices before bouncing back shortly after.

Dr Waheed has reassured foreign investors that no businesses would be targetted for political reasons, although he did not rule out re-examining “certain deals”.

Attorney General Azima Shukoor announced that she had forwarded some of the previous government’s deals to the Auditor General but said no decision had yet been made on GMR. The government announced the suspension of any new Public Private Partnership schemes last month.

Spokesman for the Maldivian Democratic Party (MDP) Hamid Abdul Ghafoor argued that the new figures in the government were not doing enough to protect foreign investment.

“If they were going to protect the economy, they would be more proactive, rather than simply saying we can’t do it,” said Hamed. “This will seriously impact the the development of the airport. In the meantime, investors lose confidence.”

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