Tag: concession agreement

Maldives government denies US$160 million arbitration talks with Axis Bank

The Attorney General (AG’s) Office has denied receiving any notice of arbitration from Axis Bank, one of the lenders backing a US$511 million airport development project voided by the government late last year.

In November 2012, President Dr Mohamed Waheed’s government declared void a concession agreement signed by the previous government with Indian firm GMR, to manage and build a new terminal at Ibrahim Nasir International Airport (INIA), and ordered the company to leave the country within seven days.

Following the decision – later cleared by Singapore’s Supreme Court – project lender Axis Bank announced its intention to seek a repayment of loans taken out for the project, which were guaranteed by the Ministry of Finance and approved by the AG’s Office under the former government.

“Arbitration process”

The India-based Financial Express publication reported yesterday (April 5) that Axis Bank had initiated an arbitration process with the Maldives government as part of efforts to recover loans granted to GMR with an estimated value of US$160 million (MVR 2.4 billion).

Ahmed Usham, Deputy Solicitor General for the AG’s Office, told Minivan News today that although some discussions had been held with Axis Bank, there had been no notice of arbitration given to the state by the finance group over the loan issue.

“We have requested some documents from [the bank] and we are set to meet with them after receiving these,” he said.  “There has been no talk of arbitration.”

Usham added that the documents requested from Axis Bank by the AG’s Office pertained to loans taken from GMR as part of the INIA development.

Acting Minister of Finance Ahmed Mohamed said he too was not aware of any arbitration hearings concerning Axis Bank, or even if talks had been held on the matter.

“All I am aware of is that there was a teleconference held Thursday (April 4),” he stated.

GMR arbitration

The government meanwhile is set to participate Wednesday (April 10) in the preliminary hearing of a separate arbitration case with GMR over the decision to void its airport concession agreement .

Authorities have previously told local media that the meeting, scheduled to take place in London, was not an official arbitration hearing, but rather a means to outline the timeline for both parties to present their case. Once the process for the arbitration is agreed, official hearings are expected to begin in Singapore.

According to the Attorney General’s office, the Maldives will be represented by Singapore National University Professor M Sonaraja, while former Chief Justice of the UK, Lord Nicholas Addison Phillips, will represent GMR.

The arbitrator mutually agreed by both GMR and the government is retired senior UK Judge, Lord Leonard Hubert Hoffman.

Concession agreement

In 2010, GMR-Malaysia Airports Holdings Berhad (MAHB) consortium, the government of former President Mohamed Nasheed and Maldives Airport Company Limited (MACL) entered into a 25-year concession agreement worth US$511 million (MVR 7.787 billion) – in which the GMR-MAHB Consortium was contracted with the management and upgrading of Ibrahim Nasir International Airport (INIA) within the 25 year contract period.

However in November 2012, the government of President Dr Mohamed Waheed Hassan Manik declared the developer’s concession agreement void and ordered it to leave the country within seven days.

A last minute injunction from the Singapore High Court during arbitration proceedings was overturned on December 6, after Singapore’s Chief Justice Sundaresh Menon declared that “the Maldives government has the power to do what it wants, including expropriating the airport.”

GMR is seeking US$800 million in compensation for the sudden termination, while the Maldivian government is contending that it owes nothing as the contract was ‘void ab initio’, or invalid from the outset.

If decided in GMR’s favour, the outcome of the case could potentially see the Maldives facing sovereign bankruptcy, with millions of dollars in additional debt emptying the state’s already dwindling reserves, crippling the country’s ability to obtain further credit, and potentially sparking an economic or currency crisis.

If decided in the Maldives’ favour the case risks setting a legal precedent for effective nationalisation of foreign investments signed under previous governments, and placing existing investors further at the mercy of the country’s turbulent politics.

Kuwaiti interest

Discussing the future of INIA on Thursday, President Waheed was reported in local media as stating that authorities in Kuwait had expressed an interest to “assist in the development” of INIA, following a recent official visit to the country.

“Kuwait is really interested in the airport. It’s because we have received a great deal of assistance from the Kuwait Fund to develop the airport so far. They are well aware of it,” he was quoted in newspaper Haveeru as saying.

“They really believe that we have managed to develop the airport with the assistance of Kuwait. So there is a lot of interest. They are very happy that the government has now taken the initiative to develop the airport.”

President’s Office Media Secretary Masood Imad said he was in a meeting and unavailable for comment when contacted by Minivan News.

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Audit of GMR airport deal to be completed in February

Auditor General Niyaz Ibrahim has said that a special audit of the awarding of a concession agreement to develop, manage and operate Ibrahim Nasir International Airport (INIA) to a consortium of Indian infrastructure giant GMR and Malaysian Airports Holding Berhad (MAHB) is currently underway and will be completed in February 2013.

Niyaz told state broadcaster Television Maldives (TVM) yesterday (November 5) that an experienced British auditor was expected to join the team conducting the audit during the first week of December.

“We have completed a large portion of [the audit] with a special team dedicated to it,” Niyaz said. “We have been able to collect almost all the documentation we need and have reviewed them.”

He added that the audit of the bidding process has been completed. “After that, we will carry out a study of the contract and different analyses,” he said.

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Auditor General, ACC Chair dismiss Attorney General’s delay allegations over GMR issue

Auditor General Niyaz Ibrahim and Anti-Corruption Commission (ACC) Chair Hassan Luthfy have dismissed claims by Attorney General Azima Shukoor last week that the government was awaiting completion of investigations by the independent institutions before making a decision on annulling the concession agreement with Indian infrastructure giant GMR, to develop and operate the Ibrahim Nasir International Airport (INIA).

“I would like to point out that the Anti-Corruption Commission still hasn’t finished the complete investigation into the GMR matter. This also presents difficulties for us,” Azima said at a press conference last week.

“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.”

However, ACC Chair Hassan Luthfy told newspaper Haveeru yesterday that he did not believe that the government was awaiting the completion of the ACC investigation to take action.

Luthfy said that the government had failed to take action on corruption cases investigated by the ACC and forwarded for prosecution.

“Hence in reality this is blaming someone else while failing to undertake their own responsibilities. I do not think that a party [government] who cannot take action over our previous findings on inquiries can take action in this [GMR] case,” Luthfy was quoted as saying.

Luthfy told Minivan News in September that the investigation could “take some time.”

Auditor General Niyaz Ibrahim meanwhile told state broadcaster Television Maldives (TVM) yesterday that he “could not accept” the Attorney General’s claim.

“If the government believes the agreement should be annulled, the government has the discretion or powers to do so,” he said. “The work of the Auditor General’s Office is not part of the government’s decision-making process. If the government made decisions based on what the Auditor General’s Office says, that would compromise the independence of the Auditor General’s Office.”

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