Tag: GMR

Comment: Is privatization only happening in the Maldives?

Privatization is one of the economic policies of modern governments, be it large or small, democratic or authoritarian, capitalist or socialist. Privatization is a global phenomenon. The trend towards privatization can be traced back to the 1970’s and 1980’s.

Firstly, it was President Jimmy Carter who in the year 1976 said American Administration ‘lacked administrative skills’ for the performance of daily work, which shook entire public administration and changed its traditional performance. This led to  the emergence of new approach in the discipline of Public Administration called ‘New Public Management’ (NPM) perspective.  The successor of Jimmy Carter was Ronald Reagan, who was convinced that the administration must undergo changes to tackle new problems. America was facing huge budget deficits and inefficiency, which Reagan accused as the result of the misallocation and mismanagement of public funds.
The idea which promoted privatization was that government is not the solution to the problem, but rather it is the problem to the solution.
In England Margaret Thatcher, then prime minister, was faced with similar situations. The public spending was increasing, as productivity and efficiency of public bodies were in decline. This also added fuel to the growing idea of free markets, deregulation and privatization. The government which governed least, or the ‘rolling back of the state’, was the idea behind privatization.

What about communist and socialist states?
For a long time China was regarded as an ‘inward looking’ and isolationist country. During the revolution in 1949 chairman Mao was much inspired by the writings of Marx and Lenin which led to establishment of the communist state. However in the year 1979 Chinese leadership felt it must compete in international trade to help boost their economy. Today China is regarded as the world’s second largest economy, with growth rates around 10% per year.

With the fall of the Berlin wall in the year 1991 the Soviet Union disintegrated. This marked the end of the rivalry between communist Russia and Capitalist America, and was regarded as a triumph for democracy and capitalism. This made the whole world believe that democratic states are the best states and capitalism is the best economic policy. To perpetuate the idea of capitalism and democracy which favored privatization, international institutions such as IMF, World Bank and WTO promoted ‘Washington Consensus’ in the interest of the West.

It is also interesting to note that the so-called socialist state of Cuba, under the leadership of Raul Castro, talked in favor of privatization. Cuba planned to layoff half a million state workers stating that too many workers with low productivity burdens the budget.

The Indian case
Indhira Gandhi was the champion of Indian socialism during the 1960’s. The word ‘socialist’ was added into the Indian constitution to direct its policies towards socialism. The nationalization of 14 Indian banks and its coal industry came when socialism in India was at its peak. However India entered into a debt trap by the end of 1990’s because of excessive wasteful public expenditures and inefficiency in the public sector. Therefore India adopted the new economic policy Liberalization, Privatization and Globalization (LPG) in the year 1991 under the leadership of the then finance minister Manmohan Singh.  Today India is regarded as one of the major emerging economies of the world with the growth rate of around 8% per year.

The Maldives
Privatization of the Maldivian economy has been a hot topic since 2008, with the arrival of the first popularly elected government under the leadership of Mohamed Nasheed. Since this government came into power one of its economic policies has been privatizing the economy. The sale of Male’ International Airport to Indian company GMR was one of the very first steps in this direction. As Maldives tries to expand its tourism sector the need for a modernized airport and efficient management arises to compete with its counterparts, such as neighboring Sri Lanka. The airport was not developing enough to compete and give decent service to the tourists. The airport remained as it was without a major improvement in infrastructure.

In the upcoming year the current government has decided to privatize 5 more companies. This includes STELCO, Maldives Post Limited, Island Aviation, Housing Development Corporation and Maldives In-Flight Catering. However the privatization of these 5 companies was rejected by the parliament, which stated that it violates Maldivian financial laws.

There were plenty of objections to privatization in England and the US during 1980’s, protests in India during the 1990’s and also in Maldives since 2009 against the idea of privatization. I acknowledge the protestors also have points to prove, such as the private sector‘s objective to maximize its profit at any cost and the widening of income disparities because of private sector.  I shall talk about the process and defects of privatization in another occasion.

Therefore the idea of privatization is a global phenomenon and is happening in most countries in the world. It is happening because of inefficiency, delay, corruption, red tapism and nepotism in the public sector, in the interest of delivering results the people expect.

What comes to mind is a couplet written by English poet Alexander Pope. He wrote, “For forms of government let fools contest; whatever is best administered is best.” Therefore it is very clear that whether it be a democratic, authoritarian, socialist or communist government, at the end of the day if that government is not able to administer and live up to its promises, then that government will lose popularity.

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Comment: Open Letter to the President

Open letter for his Excellency Mohamed Nasheed, The President of The Republic of Maldives.

Excellency, Honourable Mr. President: May I start this open letter by wishing you and your family to be blessed by God alike your Government and all Honourable Maldivians, people that I have in great esteem and very close to my heart.

The first time I was in your lovely country was long ago and naturally like most, I have
repeatedly come back. I did it as a tourist and as well as a business man with interests as I am (or… was until GMR destroyed my business) a small business man with economical activities in your country. At a certain moment I even created projects like the Sea University, that should develop studies and produce medicines using the elements exiting in the sea, as the sea is one of the greatest Maldivian assets. IT is not to be forgotten Excellency, that the day tourists will be gone, the sea will still be there.

The duty free island, a place where tourists could by all sorts of goods duty free, different from the airport, was another project that never saw the light but was design by me with all the love I have for Maldives.

The first time I landed in the Maldives, I was coming from Sri Lanka, and the contrast was so high that I really felt I was on paradise. The country was clean, peaceful, the water blue, the people nice. It was sunny and very organised. I was thrilled.

True that at that time, freedom of expression did not exist, and talking too much or too loud could mean something terrible. I understand that today under your presidency, the situation changed and Maldives is now part of a big international club where freedom and respect for life is a core subject. Being myself an European, I admire you Sir and I admire your government as the path to development and growth always goes via the respect and creativity of people, that naturally cannot exist without freedom.

Sir, I am not an important person. I’m a humble European, that dedicates his life to coach Presidents of corporations in management, as well other institutions like the Catalan High management of the police or the High management of the European Patent or Brand office. I am not a guru, certainly do not pretend to be, but I’m proud of being a humble person, hard worker and a thorough professional that enjoys working in life. I am not into politics and would never pretend to talk about something I don’t know.

I am writing you this open letter Excellency, because I really love your country and feel sad when I see that people taking advantage of it.

A country, Your Excellency, needs above all her people and needs to invest in developing her citizens. If there is not a critical mass of national brain power being the driving force of the economy and culture, the country will fall very easily into the hands of abusers, the same ones that in the international scene move the economy with the only goal of making money without values or respect for the people regardless where their operations take place. For them, the geography is not important. Once the cows are milked, they are ready to move to another pasture with no guilty feelings of what is left behind.

You and your government are making huge efforts to develop the economy and growth. That is perceived from the outside. You work hard under a climate of respect and social peace, thus increasing the well being of Maldivian citizens, and sometimes that takes time to be seen. Results don’t come quick, we know. In this sense it is clear that Maldives needed a bigger up-to-date airport, a modern gate to the country and to get it you had to do work with international corporations with expertise in the field. It is therefore normal that in return those corporations request to have for them the business cake represented by the flow of currency expressed in millions coming from the tourists, a cake that is very attractive. So far, so good, but what about Maldivians?

At this point I apologise as I don’t want to step into the internal affairs of your country, but Excellency I live in a country that has 17 autonomous regions, with 17 governments and with 17 Presidents with their cabinets and a central government, so I think I know something about nationalism and protecting the citizens when it comes to putting the economy into international hands. These days the world is as as small as a handkerchief, so international cooperation is inevitable, but what about the protection
and development of the local business people? Shouldn’t the airport structure consider this? Shouldn’t Maldivian citizens’ business be allowed to profit from their country’s development? Shouldn’t the airport have a place for all, Dhivehi people and international business people? Airports for a country like Maldives are a strategic subject.

Once more I apologise as I am no one to give lessons on the subject but being involved with the Maldives for so long, my love for the country cannot keep me silent. A country is made by it’s people and its people make the country. If that is not to be considered why should people vote for any government? The airport could and can have a place for everybody. The airport belongs to the Maldives, is it so difficult for international corporations to understand it?

With my greatest respect and admiration for you and your government, that is getting more and more respect in the international scene, I remain yours faithfully.

God bless the Dhivehi people.

All comment pieces are the sole view of the author and do not reflect the editorial policy of Minivan News. If you would like to write an opinion piece, please send proposals to [email protected]

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Civil Court orders MVKB to vacate duty free shop within 48 hours

The Civil Court has ordered MVK Maldives Private Limited to vacate the Alpha MVKB Duty Free shop and hand the premises to GMR Male’ International Airport Private Limited within 48 hours, or face eviction by the authorities. The deadline expires at 10:00am on Wednesday.

Civil Court Judge Maryam Nihayath ordered the Police and Customs Department to implement the verdict in the event that MVKB refused to comply.

MVK’s lawyer Azima Shukoor said that shop evacuation and handover by MVKB was not possible as the shop was currently the property of Customs. “There is nothing we can do about the 48-hour deadline since we don’t have access to the shop. We are forwarding the court order to Customs and requesting access to take inventory of the shop before anything further is done,” she said.

Shukoor explained that certain goods required specific air temperatures, and the shop does not currently have cupboards or shop doors.

Shukoor added that MVKB’s case had been appealed to the Supreme Court, and that the company is awaiting that ruling.

The verdict came after GMR filed a case in the Civil Court for the second time when MVKB refused to implement the earlier verdicts of the Civil and High Courts on the issue.

Judge Nihayath recalled that the High Court has ruled that MVKB has no right to use the land without GMR’s consent because it violates contractual rights.

On December 4, GMR officials began to physically remove the Alpha MVKB Duty Free Shop at Ibrahim Nasir International Airport (INIA) after “several notices” to vacate the area were “ignored”.

On December 13, the High Court ruled that GMR had vacated the Alpha MVKB Duty Free Shop at Ibrahim Nasir International Airport (INIA) legally and according to the agreement between both companies.

The High Court stated that GMR gave notice on March 1 and, as per the agreement, the contract terminated on March 31. As no party could extend the termination notice, the court concluded that MVKB had no right to remain at the airport without approval from GMR.

Company CEO Ibrahim Shafeeq subsequently organised a protest on Thursday, December 15 “to demonstrate our opinions and dislike of what GMR has done to us, and to get public responses.” Posters and banners read “Leave us Alone” and “GMR Go Home.”

Shafeeq today said the protest was “very successful, and more people are signing the petition [against GMR].”

Shafeeq said he would continue to protest GMR. “It hurt me and as an individual I have to defend myself,” he said.

Speaking to Minivan News yesterday at the groundbreaking ceremony to mark the beginning of work on the new airport terminal, GMR Chairman G M Rao said the company had encountered similar resistance from existing concessionaires when developing airports in Delhi and Istanbul.

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GMR hosts groundbreaking ceremony for new terminal

Indian infrastructure giant GMR on Monday hosted a groundbreaking ceremony on Hulhule’ for the new terminal of Ibrahim Nasir International Airport (INIA).

President Mohamed Nasheed, GMR Chairman G M Rao, Malaysia Airports Managing Director Sri Bashir Ahmad and assorted officials dug the first hole for the new terminal in front of journalists both local and Indian.

Aircraft belonging to local airlines flew overhead, with seaplanes from Maldivian Air Taxi and Trans Maldivian Airways dropping flowers onto the newly-reclaimed land.

Addressing the gathered dignitaries, officials, journalists and GMR staff, Rao said the company was conscious that INIA was the gateway to the Maldives.

Thoughout the ages the development of human civilisation had been spurred by transport links, Rao said, promising that the new airport would be a hub for economic development and modernisation.

“Since we have come here the love and affection of Maldivians has been of great comfort to us,” Rao said. “As an infrastructure developer GMR is the custodian of the asset it builds, while the asset belongs to the nation and its people. For the last year, we have fulfilled every one of our commitments to the government of the Maldives, and we intend to respect and fulfill every remaining commitment.”

Dehli Airport was ranked 101 in quality in the 40-50 million passenger category by the Airports Council International in Geneva when GMR took it over, Rao said. “Now it is ranked number four. And soon after completing the new airport at Hyderbad, it was ranked first in the 5-15 million passenger category.”

The bidding process for the airport, which has been attacked by opposition parties in the Maldives, “was awarded in a transparent manner in collaboration with the International Finance Corporation (IFC) of the World Bank,” Rao said.

“It was a tough global competition, and [the bid] was finally awarded to GMR. It is a privilege to be entrusted with the responsibility for developing the airport, and GMR promises to deliver the airport well with the timeline.”

GMR had begun sending batches of 29 local employees every two months to India for on-the-job training, he said, and had committed to sponsoring 10 students every year to study engineering disciplines in India.

During the political crisis in Egypt earlier this year, “GMR safely transported 160 Maldivians from Bombay to the Maldives in a special aircraft, after they were evacuated from Egypt,” Rao said.

The company had also taken four teachers from Iskander school to India to see best practices in education, Rao said, adding that there were “various other initiatives in the pipeline.”

“Whatever the challenges, we are committed to delivering the promise we have made to your nation. GMR will find solution to every problem,” he said.

In his own address, President Nasheed said he wished to assure GMR that the government was “200 percent behind your contract, and every single other contract the government has signed with any other foreign party in this country. Not just contracts signed by our government, but also contracts that any ruler of the Maldives has signed with any party. We will honour it.”

The opposition aligned Dhivehi Qaumee Party (DQP) recently filed a successful Civil Court case against the government claiming that GMR’s charging of a US$25 airport development charge for departing passengers, as stipulated in the concession agreement, was illegal. GMR took a stock price hit on the Mumbai stock exchange following the announcement.

GMR was also the subject of protests last weekend and a proposal in parliament for local businesses to be “defended” from the airport developer. The Alpha MVKB duty free shop at the airport was forcibly vacated by GMR and Customs officials eight months after GMR’s original notice. Rulings from the Civil and High courts upheld GMR’s right to terminate the shop’s contract, however company CEO Ibrahim ‘MVK’ Shafeeq launched the protest under the slogan ‘Go GMR Go!’.

Speaking to Minivan News, Rao said that the ADC was part of the agreement with the Maldives, and noted that President Nasheed had said the government would honour the agreement.

As for the stock market impact, “We are not working for the stock market, and we are very confident in the government of the Maldives.”

He noted that the developer had had similar experiences with unhappy concessionaires when redeveloping Delhi Airport, and that this was part of the transition process that would be vindicated when the new terminal was opened.

President Nasheed meanwhile also addressed the gathering in Dhivehi, stating that it he wished to impress upon his people “the magnitude” of the occasion in their language.

There were, he said, “people [in the country] who want to go back to the time when the islanders remained locked in their islands, with no [communications or transportation network].”

If the citizens wanted to have the development they desired, Nasheed said, “we have to be connected and think broadly, take ideas outside our islands, outside our atolls, and outside the borders of the Maldives.

”Today you all have heard about the death of the North Korean leader, Kim Jong Il – that is because you are connected to the outside world.”

“No sincere person” could speak out against developing the airport, Nasheed said.

“More than one million tourists visited the Maldives this year to spend their holiday on the beach – that beach is what we sell in the Maldives. But many years have passed since this airport was first built, and day by day the need to improve the airport and its services has kept increasing.”

Arriving tourists were spending in some cases over US$1000 per night for a bed, and should enter the country through an adequate airport, he said: “the tourists begin their holiday at the airport.”

Nasheed expressed surprise at the hostility to the airport development charge, noting that only a few Maldivians frequently travelled outside the country.

“Why should anyone be worried about paying US$25 to develop the airport from the money they spend on their weekend in Sri Lanka?” he asked.

He noted that the Maldives had always welcomed foreign investors, and that there was no harm in them doing so.

“The gov understands the need for foreign investment and we are aware of the role that foreign investors play in development of this country,” Nasheed said.

“A fair amount of our assets are foreign owned, even now, and today I am happy to say we are again increasing our list of assets by one with the groundbreaking ceremony we are having today.”

The new terminal is due to be completed in June 2014, and will be run by GMR under a 25 year concession agreement extendable for a further 10 years. GMR holds a 77 percent stake in the venture, with the remaining 23 percent held by Malaysian Airports Holdings Berhad (MAHB). The US$400 million project is the single largest foreign investment in the history of the Maldives.

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GMR could colonise economy: DQP

A 24-page book released by Dhivehi Quamee Party (DQP) 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”.

In the book, titled “Handing the airport to GMR: The beginning of slavery”, the DQP claim that the government has not only leased INIA operations to GMR, but  has allowed the company to open other businesses in the Maldives.

GMR Male’ Retail was recently registered at the Economic Ministry. It is the second GMR business registered in the Maldives.

Citing information available in the public domain, DQP alleges that all Hulhule island lagoon resources will become the property of GMR, including the Hulhule Island Hotel (HIH), in-flight catering services and the Maldivian Air Taxi service.

Because salaries paid to Maldivian employees are a burden, the book claims, GMR will bring in Indian employees and house them in Hulhumale, “creating a visa-free zone for Indians to come and go”, reads Haveeru’s translation.

DQP further alleges that the airport development budget covers the expense of building hotels, offices and apartments on Hulhule but claims that there is no official requirement for GMR to develop a runway – apparently a key benchmark of local benefits.

Meanwhile, GMR today held a ground-breaking ceremony at INIA today to celebrate the start of work on a new terminal.

When asked about the groundbreaking, DQP member Dr Mohamed Jameel commented that “any development is good as long as it benefits the people of the Maldives. But the main benefit would be a new runway, and we don’t see that GMR is contractually obligated to construct one. Our question is, who will do the runway?”

London Heathrow has two runways, and is the busiest airport in the world with over 65 million passengers annually. The new terminal in the Maldives will take the airport up to a capacity of five million.

Jameel said completed development projects are not contributing to national development.

Other claims in the book include that all foreign currency earned at the airport is being deposited abroad by GMR, leading to the current dollar shortage.

Jameel called the book “a responsible work in the sense that it highlights issues relating to overall economy. This issue is very close to the hearts of the Maldivian people since the work at the airport was originally done by the Maldivian people. And we don’t agree that the people have the best deal.”

Minivan News asked whether use of the word ‘slavery’ in the book’s title had a purpose.

“In modern times people don’t colonise by taking over other countries, they colonise through economic and business ventures. A small country like the Maldives is very vulnerable to its economic needs. We have a history of neighboring countries manipulating the Maldives through economy, and it has been difficult to break those ties,” said Jameel.

President’s Office Press Secretary Mohamed Zuhair said 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.”

He added that the negative publicity could have a negative impact on relations with “a very friendly neighbor, India.”

Ultimately, Zuhair doubted that DQP’s book would deliver the desired outcome.

“Attempts to ferment nationalist sentiment against a profitable corporation are bound to fail because people are more aware of the issues. The income the government makes from the airport is already double what the previous government made.”

An informed source close to the former regime told Minivan News that the former government’s plans for airport development were not Male’ based, but instead re-routed growth and profits to Maamigili. The source suggested that individuals close to former president Maumoon Abdul Gayoom were then in a position to “benefit significantly” from the plan.

“The opposition does not like that the current government is keeping the business in Male’,” said the source.

DQP plans to distribute 20,000 copies of the book.

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GMR Chairman to attend groundbreaking of new terminal

Billionaire chairman of Indian infrastructure giant GMR, G M Rao, will attend the groundbreaking ceremony tomorrow for the new terminal of Ibrahim Nasir International Airport (INIA).

President Mohamed Nasheed will also attend the ceremony.

The constructing of the new terminal is the Maldives’ single largest foreign investment. GMR has said it intends to complete the terminal in 2014 and then turn Male’ into one of the top five airports in the 1-5 million passenger category.

The company has meanwhile been upgrading the existing facilities in a ‘throw-away’ refurbishment, including upgrades to the baggage belt and security area, lounges, refurbishment of the domestic terminal, new airline offices and a food court.

The opposition has meanwhile maintained a long-running campaign against the airport redevelopment and the government’s 25 year concession agreement with GMR.

Recent controversy has centred around GMR’s proposed US$25 airport development charge for departing passengers, which was recently overturned by the Civil Court in a suit filed by the Dhivehi Qaumee Party (DQP), and its eviction of the Alpha MVK duty-free shop, a move approved by the High Court that nonetheless led to protests last week.

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Independent MP proposes amendment to “defend” local businesses from airport developer

Kulhudhuffushi-South Independent MP Mohamed Nasheed has proposed an amendment to the Business Registration Bill in a bid to reserve airport shops and services for local ownership.

India infrastructure giant GMR currently claims exclusive rights to certain duty free items to be sold at Ibrahim Nasir International Airport (INIA), he said.

“My view is that GMR’s role has shifted from management to ownership,” Nasheed told Minivan News. “This is all about excessive and detrimental penetration into the local economy.”

A parliamentary committee is reviewing the bill and its proposed amendment.

In response to inquiries from Minivan News, GMR issued the following statement: “As part of the concessionaire we follow the terms and conditions of the agreement between the government of the Maldives and us and expect the government too to abide by it.

“The concessionaire agreement grants and specifies entitlement to directly or concession out retail activities at INIA.”

GMR is currently leasing Ibrahim Nasir International Airport (INIA) for a 25-year development project. Upon assuming management of the airport earlier this year, all airport shop contracts were set to expire on December 31, 2011 as per an earlier agreement with Maldives Airline Company Limited (MACL), with the exception of Spice Island.

The Economic Ministry today announced that GMR Male’ Retail has been registered in the Maldives. It is one of two locally-registered businesses under the corporation’s name.

Nasheed said his proposal refers to “duty free, customs clearance, cargo clearance, and the management of bonded warehouses,” industries which he believes can safely be trusted to Maldivian ownership.

“I have always objected to divesting ownership of Maldivian businesses with foreign investors when the business is within the local capacity and competency,” he explained.

“I respect that there are some areas of business and industry in which the Maldives has neither capacity nor competency. But the enterprises covered in my proposal have traditionally been local affairs. There is no reason to exclude them now simply as perks for foreign investors.”

Nasheed pointed out that many Maldivian businesses grew up around and depend on airport operations. Maldivian Island Aviation has allegedly lost business since the transfer of management, while the group running the Commercially Important Persons (CIP) lounge is now defunct.

In November of this year, GMR announced its intention to take control of cargo handling services starting in 2012. The move has allegedly forced Maldivian businesses Freight Forwarding Services and Bonito Group to lay off several employees.

In recent news, the Alpha MVKB duty-free shop at the airport was forcibly vacated by GMR and Customs officials eight months after GMR’s original notice. Rulings from the Civil and High courts upheld GMR’s right to terminate the shop’s contract, however company CEO Ibrahim ‘MVK’ Shafeeq has launched a protest under the slogan ‘Go GMR Go!’

“I understand the contractual obligation on the government’s part, and I respect the bidding process and the business competition that comes with it,” Nasheed reflected. “The airport is a gateway for tourism, but GMR’s excessively favorable terms are excessively disadvantageous to Maldivians.”

The Maldivian government signed a 25-year contract with GMR on 28 June 2010.

Under the contract the Maldivian government receives:

  • A sum of US$78 million as advance payment which is to be deducted from the profit due to government.
  • 1% of the Gross Revenue in the first four years (2010-2014) and 10% of the Gross Revenue from the general business in the remaining years.
  • 15% of the Gross Fuel Sales in the first four years and 27% of the Gross Fuel Sales in the remaining years.
  • GMR is also to invest US$375 million over a period of 25 years in construction of the new terminal.

Nasheed claimed that the government saw the GMR deal as an income generating source to solve income problems at the time. “But the deal wasn’t revised over the years,” and GMR has meanwhile made significant profits from jet fuel sale.

“GMR gets its fuel from State Trading Organisation (STO). STO rates have remained the same over the past year, however GMR’s rates have been raised twice.” He added that landing and airline fees have increased, and voiced concern that the price hike would deter business.

Meanwhile, GMR has recently opened a 30-office Airline Offices Complex, and several airlines including Ethihad and Hainan have lately begun services to Male’.

The Business Registration bill reserves certain areas of business for local owners. Nasheed said his proposal aims to enlarge that domain by two to three commodities.

“I intend to use my role as a parliamentarian to propose this amendment,” he said. “It’s just an initial step for the proposal, and I’m not sure whether it will survive the whole process. But I’m hopeful and I feel good about having done it.”

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Customs investigates GMR eviction of Alpha MVKB

Maldives Customs Authority has said it will take “necessary legal actions” against GMR, which it claims illegally attempted to vacate Alpha MVKB Duty-Free shop at Ibrahim Nasir International Airport (INIA), reports local newspaper Haveeru.

Customs is investigating the case, an unidentified senior official reportedly told Haveeru.

After the attempted eviction on December 5, Customs Director Ismail Nashid told Minivan News that goods at duty free shops fall under Customs’ supervision and the “unsold goods can only be taken out of the shops with their permission”.

However, “GMR took out the goods without notifying us,” a separate Customs official told Haveeru today.

GMR directed Minivan to Customs over the issue. Customs did not respond to Minivan’s inquiries at time of press.

GMR began dismantling the Alpha MVKB Duty Free Shop, which sells alcohol, cigarettes, and watches, after “several notices” to vacate the area were “ignored” by the owners, GMR’s Head of Corporate Communications, Mahika Chandrasena earlier told Minivan News.

MVK has meanwhile decided to protest GMR’s management, in spite of rulings from the High and Civil courts that GMR’s termination of its contract with Alpha MVKB Duty-Free was lawful.

The High Court noted that GMR gave notice on March 1 and, as per the agreement, the contract terminated on March 31. As no party could extend the termination notice, the court concluded that MVK had no right to remain at the airport without approval from GMR. Alpha MVKB was originally leased for 10 years under an agreement between MVK and Maldives Airports Company Limited (MACL), with a one month termination clause, the court noted.

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Opposition calls for no-confidence motion against Economic Minister over ADC

The opposition has announced it will forward a no-confidence motion against Minister of Economic Development, Mahmoud Razee, for handing the airport to Indian infrastructure giant GMR.

The Civil Court last week ruled against GMR in a case filed by the Dhivehi Qaumee Party (DQP), challenging its right to collect a US$25 (Rf385.5) Airport Development Charge (ADC) and US$2 (Rf30.8) Insurance Charge from January 2012.

The DQP had claimed that a pre-existing Airport Service Charge (ASC) of US$18 (Rf277.56) invalidates the ADC, which was specified in the concession agreement signed with the government last year.

GMR shares on the Mumbai stock exchange fell 7.57 percent on the day of Civil Court ruling, which could potentially leave GMR facing an annual US$25 million shortfall, India’s Economic Times reported.

“GMR 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,” the company said in a statement following media reports of the ruling.

Villufushi MP Riyaz Rasheed alleged today challenged the legally of Razee’s signing of the document, claiming that it allowed GMR to “unlawfully tax” passengers, and claimed he was responsible.

Haveeru reported that the opposition parliamentary group allied against Razee included MPs from the Dhivehi Qaumee Party (DQP), Progressive Party of Maldives (PPM) and several independent MPs.

Razee said he was “waiting for the  awaiting the motion to be duly processed.”

“There’s nothing wrong or illegal about [the contract]. It’s up to the MPs to deliberate and decide what is to be done,” he said. “If there was anything illegal, then MPs should have had a look at it when it went through the Majlis. There were some issues that were sent to the Anti-Corruption Commission (ACC), which looked into it and things moved forward.”

Following the civil court ruling last week, President Mohamed Nasheed’s Press Secretary Mohamed Zuhair said he believed the government was obligated to appeal the ruling in the High Court. However neither Zuhair nor the Attorney General were responding to calls at time of press.

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