Tag: concession

MDP calls for GMR reinstatement

Opposition Maldivian Democratic Party (MDP) has called for the reinstatement of the airport development contract with Indian GMR Infrastructure and warned the party will terminate any new agreements if it comes to power.

“The MDP immediately calls on the Government of Maldives that instead of repealing the annulled agreement in order to award it to another party, to render it to its original benefactor. The failure to conduct this repeal would allow Maldives to suffer unforeseeable risk and irrevocable harm,” the party said in a statement today.

“[T]his party on this day hereby resolves that any government formed by this party shall annul all corrupt agreements made by this government regarding the airport and render it back to whom it is rightfully due.”

The warning comes following President Abdulla Yameen Abdul Gayoom’s call for new airport developers at an investment forum in Singapore.

The GMR, in consortium with Malaysia Aiports, narrowly won the International Finance Corporation (IFC) managed bid for the airport in 2010, and signed the agreement with Maldives Airport Company Ltd (MACL) under the former government of Mohamed Nasheed.

However, following a nationalist campaign to evict GMR and Nasheed’s ouster in February 2012, new President Dr Mohamed Waheed Hassan declared GMR’s concession agreement ‘void ab intio’ (invalid from the outset) in December 2012, and gave GMR seven days to leave the country.

After Singaporean court upheld the government’s decision, the GMR filed a claim for US$ 1.4 billion in compensation from the Maldives – a figure that eclipses the annual state budget. Arbitration proceedings are now underway in Singapore.

Yameen has conceded the government must compensate GMR, but said the company is only owed US$ 300 million.

The MDP noted an Anti Corruption Commission (ACC) investigation had confirmed the GMR agreement to be corruption free and said the agreement had been made according to legal and international best practices.

The ACC noted an MACL managed airport would raise US$ 254 million in 25 years while the GMR consortium would bring in US$ 534 million.

“For these reasons the MDP Government, having found that the best advantage for the Government of Maldives would be to privatise the airport, it was assigned to GMR with the benefit and wellbeing of Maldivian people in mind; where it was impliedly and manifestly known that the matter was undertaken not for political gain but rather for the public good,” the party said.

“Notwithstanding this, those in the opposition at that time not only distorted the facts completely to the people; but the consecutive coup government that followed unscrupulously annulled the Airport Agreement. MDP is adamant to the fact that their position did not consider the wellbeing of the nation and its people.”

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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.

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,” 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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