Tag: INIA

President opens Dharavandhoo airport in Baa Atoll

President Dr Mohamed Waheed Hassan and the First Lady Madame Ilham travelled to Baa Atoll yesterday to officially open Dharavandhoo airport.

Waheed gave a speech highlighting the importance of catering to tourist in the atoll which last year became the country’s first UNESCO Biosphere Reserve.

He also discussed the importance of developing the Maldives’ transport infrastructure  and aviation capacity.

Local media reported that helium balloons were used to remove the cloth covering the airport’s sign, marking the official opening.

Waheed had travelled the twenty minutes to Baa atoll from Ibrahim Nasir Interational Airport (INIA) in Male’ where, this morning, a giant helium balloon could be seen reading ‘Go Home GMR’, by the Indian company’s office.

The development of INIA by GMR – the largest in the country’s history – has been beset by controversy since it was agreed by the former administration with current government-aligned parties calling for the airport’s nationalisation.

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Attorney General asks for Supreme Court to decide jurisdiction on GMR

The Attorney General Azima Shukoor has said she will ask the Supreme Court to rule on whether the laws of the Maldives can be applied to the government’s agreement with GMR concerning the development of Ibrahim Nasir International Airport (INIA), local media has reported.

Shukoor, who was not responding to calls at the time of press today, said a request was sent following the release of a Supreme Court statement yesterday.

“It is against the International laws and the United Nations Charter that any action that undermines any sovereign right of a sovereign state, it is clear that courts of a sovereign nation has the jurisdiction to look into any matter that takes place within the boundaries of that state as according to the constitution and laws of that state,” read the statement.

“Even though a contract has an arbitration clause giving right to arbitrate in a foreign court does not limit a local courts jurisdiction to look into the formed contract, and it is clear that such limitations are in violation of UN Charters principles of sovereign equality, principle of sovereign non intervention within domestic jurisdiction, principle of self determination rights,” read the statement.

Shukoor told Haveeru that if the case could be dealt with by the Maldivian courts, the process would become much easier.

However, she also expressed her confidence that government would be successful in the arbitration case regarding the Airport Development Charge, which was file by GMR in Singapore.

“We can win the case at the Singapore Arbitration even by biding our time. It is quite certain,” she told Haveeru.

The original agreement, argued Azima, was drafted under UK law although both sides agreed to settle any disputes through third party arbitration.

Arbitration

Third party arbitration is often used in order to gain impartial decisions from international experts whilst avoiding the uncertainties and potential limitations of local courts.

One of the world’s leading arbitration companies, the Singapore International Arbitration Centre (SIAC) gives a number of examples of why Singapore is frequently chosen for international arbitration.

Number one in its list is the country’s strong reputation for neutrality, currently placed fifth in Transparency International’s Corruption Perceptions Index, behind New Zealand, Denmark, Finland and Sweden

The Maldives is currently placed 134th in this list alongside Eritrea, Pakistan, and Sierra Leone.

The Maldives judicial system has also faced issues regarding its political independence since the adoption of the 2008 constitution.

A recent report by the International Federation for Human Rights (FIDH) said that “different sections of the judiciary have failed to become fully independent and still lack adequate expertise.”

“According to testimonies from members of the judiciary met by the FIDH team in Male’, under the successive administrations, no political party has actually ever shown any willingness to establish an independent judiciary since each seems to benefit from the existing system,” said the report.

“Moreover, the judiciary is allegedly under the influence of the business sector. For instance, the member of the JSC appointed by the Majlis is also one of the main business tycoon of the country. His presence in the body overseeing the conduct of judges, as well as the general pressure imposed upon the business sector on the judiciary, has therefore been subjected to controversy,” it concluded.

Both civil society groups as well as the current government have acknowledged the need for stronger independent institutions in the country.

President of the Anti Corruption Commission (ACC) Hassan Luthfee told local media yesterday that one of its three cases regarding the GMR deal was nearing completion.

Luthfee, who has recently questioned the ability of the ACC to fulfil its mandate, told Minivan News last week that a high profile case such as this was not easy for the institution to finish which was likely to result in delays.

“Even an international organization such as the International Finance Corporation (IFC) had provided expertise in this case. So when such an allegation of a major criminal offence has been made we must probe the matter quite extensively. This is by far the most high profile and sensitive case. So we must be certain,” he told Haveeru yesterday.

The IFC was forced to defend itself this week after being described by senior cabinet figures as “irresponsible and negligent” during the INIA bidding process.

Shukoor had said last week that as long as the agreement between GMR and the government is not invalidated, the agreement would be “legally binding” despite a “majority of the people” who wish to “terminate the agreement immediately”.

She also expressed the government’s concern about the effect on investor confidence that may result if the agreement was terminated.

Independent MP Mohamed Nasheed today told local media that, despite indicating its willingness to do so, the Majlis had not at present become a party to the 1958 New York Arbitration Convention which deals with the recognition and enforcement of arbitration awards.

Nasheed argued that the Maldivian constitution requires citizens to act in accordance with international conventions which have been backed by domestic legislation.

He added, however, that the Maldives’ Arbitration Act was still in the committee stage.

Nasheed was not responding to calls at the time of press.

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Indian Aviation Minister urges resolution of GMR dispute

Indian media outlets have reported that the country’s Minister for Civil Aviation Ajit Singh has asked the Maldives to consider ways to resolve ongoing disputes with Indian company GMR regarding the development of Ibrahim Nasir International Airport (INIA).

The Economic Times reported that the issue arose during a meeting with the Aviation Minister and a Maldivian delegation led by the Maldives’ Minister for Transport and Communication Dr Ahmed Shamheed.

The paper said that an official statement from the Civil Aviation Ministry had highlighted the major issues discussed:

“The contentious issues include provision of airport development charges provided for in the agreement with the GMR, but termed as unauthorised by a local court in the Maldives, and a demand for an additional runway not provided in the agreement,” the statement is reported to have said.

The development of the airport – expected by the company to total US$511m in costs – is the largest foreign investment project undertaken in the Maldives’ history and includes commitments to complete the renovation of INIA’s existing terminal this month.

The issues detailed during the meeting have been compounded in recent months by government aligned parties calling for nationalisation of the airport as well as orders to halt construction work following allegations of missing permits.

CEO of GMR Maldives operations Andrew Harrison today told Minivan News that the government had informed the company it had complied all regulations, but had not yet given it the go-ahead to resume work.

“We have not done any work since August 2,” said Harrison.

During a visit to India last month, leader of the government aligned Dhivehi Rayyithunge Party (DRP) Ahmed Thasmeen Ali warned of serious repercussion for investor confidence should the country renege on the GMR deal.

Sri Lankan media this week has also reported Business Council leader Hussain S Hashim as saying that a lack of trade dispute mechanisms in the Maldives was stifling bilateral trade.

Travel Daily India reported that additional measures to strengthen bilateral ties in the aviation sector were discussed during the meeting.

Increasing air links between Indian cities and the Maldives was a topic reportedly discussed. It was reported that Island Aviation, Spice Jet, and Mega Maldives are all planning to connect Mumbai, Delhi and Chennai with Male’.

Changes to the countries’ aviation agreement was also mentioned in Travel Daily, with the current rules only allowing flights with carrying capacities of less than 150 passengers.

“India will relook the agreement which will help in boosting tourism between the two countries,” Singh is reported to have said.

During his official visit to India in May, President Dr Mohamed Waheed Hassan spoke of his desire to bring more Indian visitors – who currently represent only 2.9 percent of the market share – to the Maldives.

“Not enough Indian tourists are coming to the Maldives and that is a matter of concern for us. I am sure it is also a matter of concern for India, particularly when you realise that there are so many Chinese tourists who are coming to the Maldives now,” Dr Waheed told India’s Business Line.

Whilst Dr Shamheed is in India, a number of his fellow cabinet ministers have accompanied President Waheed on his official state visit to China.

Yesterday, the President’s Office website reported that Waheed had met with members of the business community in Shanghai.

Waheed is reported as having said that investors were always welcome in the Maldives.

“Maldives is open for business,” Waheed told those in attendance at the opening of the China-Eurasia Expo & the 2nd China-Eurasia Economy Development and Cooperation Forum.

The highlight of Waheed’s first trip to China as President has been the finalising of a $500million (MVR7.7billion) package of aid, concessional loans, and loans for housing construction.

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MACL chairman case sent to Civil Court

A case concerning the decision to allow the company developing Ibrahim Nasir International Airport (INIA) to deduct an Airport Development Concession (ADC) from government fees has been forwarded to the country’s Civil Court.

The Anti Corruption Commission (ACC) has alleged that former Maldives Airport Company Ltd (MACL) Chairman ‘Bandhu’ Ibrahim Saleem agreed to deduct the ADC without approval from the company’s board, according to local media.  As all three stakeholders had not signed the changes to the agreement, it could not be considered legally binding, the ACC reportedly claimed in the Haveeru newspaper.

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.

The ADC charge was deemed an additional tax last year after the then-opposition Dhivehi Qaumee Party (DQP) filed a case with the Civil Court. The court went on to rule against the charging of the ADC.

GMR subsequently deducted $8.1million, the money it would have received from the ADC,  from its first quarter concessionary payments to the government.

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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.

“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,” he continued.

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.

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.

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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Aircraft makes emergency landing at INIA

A Thomson Airways Boeing 767 aircraft made an emergency landing at Ibrahim Nasir International Airport (INIA) on Wednesday morning, shortly after taking off at 10:41am.

INIA issued a statement that the
“The aircraft declared a Full Emergency after departure due to a technical fault with the aircraft avionics,” said INIA in a statement.

“Ibrahim Nasir International Airport (INIA) implemented its procedures for a Full Emergency in conjunction with Maldives National Defence Forces (MNDF), Malé Health Corporation and
other concerned agencies.”

The aircraft landed safely at 11:46am, with no harm to the 230 passengers and crew on board.

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New transport minister calls for redevelopment of airport runway

Minister of Transport and Communication, Dr Ahmed Shamheed, has criticised GMR’s plan to develop Ibrahim Nasir International Airport (INIA), arguing that it does not provide needed redevelopment of the runway.

Shamheed said there had been a temporary closure of the airport last week as a large crack on the runway was repaired.

“The development of the runway is not part of the agreement made with GMR. And the way the airport development plan is going, there is no possibility of constructing a new runway. A beautiful design can be made, but we have to consider its sustainability,” the Minister told Sun Online.

When asked to comment, Shamheed told Minivan News that he could not say anything more specific on his department’s next move regarding the repair issues.

“But we are conducting a study into the matter. Once we establish all the facts, we will brief,” said Shamheed.

“We are trying to find out how they are going to address the issue with the runway. There is no quick fix,” he claimed.

At over US$400 million the project is the largest single foreign investment ever made in the Maldives. The plan involves an upgrade the current terminal before the construction of a new terminal on the opposite side of the island of Hulhule, which the developer has pledged to complete in 2014. Ground was broken on the site for the new terminal in December last year.

The new transport minister alleged the runway was in poor condition and in need of critical repairs. An incident in 2010 saw experts from Boeing brought in to advise on such repairs after one of its aircraft sustained damage as a result of water retention on the runway.

Managing Director of the Maldives Airports Company Limited (MACL) Mohamed Ibrahim, previously responsible for the maintenance of the site, two years ago claimed that the runway had to be re-tarred every 15 years, having last been repaired in the early 1990s.

“Devious Indians”

The political opposition under Nasheed’s government, particularly the Dhivehi Qaumee Party (DQP), were persistently critical of the airport development,  with allegations ranging from corruption in the bidding process to claims that the deal would allow the airport to refuel Israeli bombers enroute to bombing Arab countries.

Then leader of the People’s Alliance (PA) and brother of former President Gayoom, Abdulla Yameen, previously described the deal as “economic enslavement.”

Similarly, the Dhivehi Quamee Party (DQP) released a booklet in Dhivehi in December 2011 titled “Giving the airport to GMR: The beginning of slavery”, warning against “devious Indians”.

In the 24 page document (download in English/Dhivehi) the DQP claimed that the agreement did not include any requirement to develop a runway and would allow the GMR group to “colonise” large portions of the economy.

“Indian people are especially devious people”, the DQP booklet claimed. “There is no guarantee at all that GMR will invest the proposed amount. There is nothing the government can do but accept what they say and the documents they provide. This is how all the companies in partnership with the government are run.”

An unattributed letter on the party’s website published at the same time as the pamphlet claimed that the Indian government, in its backing GMR’s investment, “has a choice to make.”

“Does it want its backyard to be peaceful, prosperous, and free from corruption, nationalism, and religious problems? Does it want its backyard to be a place where wealthy Indians can spend their holiday and where its investors are respected and welcomed and not hated? Or does it want to be seen as a backer and sponsor of a corrupt and despotic regime, divorced from public sentiments, as was the case of the United States in the Middle East?”

Spokesperson for former President Nasheed, Mohamed Zuhair, claimed at the time of the contract signing in 2010 that the deal with GMR to upgrade and manage the airport had clashed with the vested interests of several tycoons, including Yameen and Gasim, drawing it into the political arena.

“Gasim was concerned the new airport might take the charter flights he had intended would be landing at the new airport he is building in Maamagilli,” Zuhair alleged at the time, “while Yameen is a third party supplier of fuel at Male International Airport through the Maldives National Oil Company, which has representation in Singapore.”

“These MPs are two individuals of high net worth – tycoons with vested interests,” he explained. “In pursuing their business interests they became enormously rich during the previous regime, and now they are trying to use their ill-gotten gains to bribe members in the Majlis and judiciary to keep themselves in power and above the fray.”

“Politically neutral”

The airport’s CEO Andrew Harrison in 2011 stated in an interview with Minivan News that he was “extremely confident of standing up to any scrutiny because of the way the bid was scrutinised by the World Bank’s International Finance Corporation (IFC)”.

Harrison today declined to comment on Shamheed’s recent statement. In a previous interview, he maintained that GMR had “always been politically neutral in that our remit is solely about developing and operating the airport.”

“We respect whichever party holds the seat of government in the Maldives. The government change is a change we respect and we remain politically neutral. We’ve got a concession agreement and we are sure that any government in power will respect that agreement. We’ve not heard anything that would make us believe otherwise,” Harrison told Minivan News at a press conference in February.

The criticism culminated in a successful court case filed by the DQP against GMR’s levying of an airport development charge (ADC), a source of revenue for the company outlined in the original contract. The court decision left the Nasheed government with the obligation to pay the difference.

Several days after assuming the presidency, Dr Waheed vowed the government would not approach the deal “from a political perspective”, adding, “It is not our intention to harm GMR. Our objective will be to resolve concerns of the public [regarding the company].”

Foreign investors should not be concerned about the political upheaval affecting their interests in the Maldives, said Dr Waheed, but hinted that some investments may come under scrutiny.

“We will not target anybody for political reasons,” he said. “If there are any reasons for concern over investment, of course any steps that need to be taken will be taken.”

Since the recent transition of presidential power, many of the former government’s policies have come under scrutiny. The Ministry of Economic Development announced that all future Public Private Partnership (PPP) schemes would be put on hold, adding to fears that the political turmoil currently engulfing the country would be detrimental to foreign investment.

Former Climate Change Advisor to Nasheed Mark Lynas recently expressed his concern over this issue: “Donors will turn away because of the political instability, and investors likewise.”

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Seaplane crash lands at Ibrahim Nasir International Airport

A seaplane crash landed on the water runway at Ibrahim Nasir International Airport with nine passengers aboard in poor weather conditions just after midday.

The Maldivian Air Taxi (MAT) aircraft was attempting to land in heavy rain on the eastern side of the seaplane lagoon on Hulhule Island at 12.08pm when it crashed into the water.

On board were a total of nine passengers and three crew who were traveling on a 25-minute flight from Lily Beach resort. One of the passengers was Maldivian, two were British and four were Vietnamese.

MAT officials were unable to confirm the nationalities of the rest of the passengers.

Everyone on board was rescued from the aircraft within 10 minutes. There were no serious injuries to any of the passengers or crew but some of the passengers were treated for mild shock.

The MAT Twin Otter seaplane remained afloat and upright but one of the floats was damaged, leaving it leaning to one side with one wing extended into the water.

CEO of GMR, the company which runs Ibrahim Nasir International Airport, Andrew Harrison, said: “Fortunately we have a very good emergency response plan.

“We were able to get the passengers rescued within ten minutes and because we knew they would probably be traumatised, we took them to the CIP ‘Koimala’ Executive Lounge for medical treatment for mild shock.

“I personally met with the passengers and told them that I wished their holiday had not ended on a sour note. All of the passengers actually said that it had not ruined their holiday and they commended the actions of the pilot and crew and congratulated them on their response to the situation.”

Work is currently underway to recover the MAT seaplane from the lagoon. The flight schedules of other seaplanes were unaffected by the incident.

Mr Harrison said: “The damage was limited to one of the floats which became detached from the aircraft, so the plane has been left on one side with one wing in the water. Every recovery is different, and as we are running out of daylight, the situation is becoming more challenging.

“Only the Civil Aviation Authority can comment on the exact cause and the nature of the crash. It’s important to note that this type of aircraft is a very durable and safe type of aircraft, and the pilots and crew operating the seaplanes have lots of experience of operating seaplanes.”

The passengers have now departed from the Maldives did not miss their connecting flights due to the incident.

The General Manager of MAT, Fredrick Groth, said: “At around noon today, one of our aircraft had an incident upon landing; one of the wings hit the water.

“We evacuated everybody and made sure there were no injuries. All of the passengers were okay and went on to their onward flights.

“We don’t wish to comment further until after the investigation has been concluded.”

The Maldives Civil Aviation Authority is now investigating the cause of the crash and interviewing witnesses. Deputy Director General, Hussain Jaleel, told Minivan News that he was unable to reveal the cause of the crash yet because the investigation is on-going.

“We cannot determine the cause of the crash yet because the investigation is not yet finished and the interviews have not been finished yet,” he said.

It had been raining heavily since the early hours of the morning and visibility was low. A seaplane pilot working at the terminal, who did not want to be named, described the weather conditions at the time of the crash as “poor” and added that the seaplane terminal had been closed several times earlier today leading up to the accident due to the bad weather.

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Government agrees to amend GMR fee while rooting for ADC

The government has agreed to deduct expected revenue from the US$25 (Rf385.5) Airport Development Charge that was to be charged from passengers departing on international flights from Ibrahim Nasir International Airport (INIA) from GMR’s concession fee to the Maldives government.

The agreement is subject to change according to a verdict from the High Court in a related case, and the passage of a bill currently before Parliament.

GMR’s request that the amount be deducted from its concession fee to the government was made to Maldives Airports Company Limited (MACL) last week, and approved following discussions between the Finance Ministry and the Maldives Airports Company Limited (MACL).

MACL officials did not respond to phone calls at time of press.

The ADC was to be charged after midnight on January 1, 2012, however the Maldives’ Civil Court blocked the fee on the grounds that it is essentially the same as a pre-existing Airport Services Charge (ASC) of US$18 for foreigners and US$12 for locals above two years of age.

Citing a contractual obligation with GMR, the government subsequently appealed the case to the High Court, where it is currently awaiting a verdict.

Having received nearly 1 million tourist arrivals in 2011, the government and GMR expected the ADC would generate US$25 million in revenue towards the current renovation of INIA.

Although the expected revenue is said to include fees charged from foreigners and Maldivians traveling abroad, it appears that at US$25 apiece the nearly 1 million tourists alone would meet the revenue needs stipulated in GMR’s original agreement.

President’s Office Press Secretary Mohamed Zuhair informed Minivan News that the notion of exempting Maldivians from the ADC had been raised in meetings, but rejected on the grounds that such an exemption would not generate the necessary revenue.

“The government and GMR have calculated to assure that shareholders and banks are properly recompensed,” he explained. “It should be a matter of pride and joy for any Maldivian to help with the development of their airport.”

Economic Development Minister Mahmoud Razee did not believe the deduction of ADC revenue from the concession fee would impact airport development.

“The government agreed to GMR’s request because the numbers were calculated accordingly” to ensure that the project was not compromised, he said.

Razee added that the agreement is only temporary.

“The government is working through the courts and the Majlis [Parliament] to find a resolution,” he said, affirming that the government continues to favor an ADC.

“When the IFC (International Finance Corporation) did the sums it took as part of the income the ADC revenue,” he explained. “Maldives receives a couple million passengers coming and going every year, but if you compare it to a place like Singapore which transits 30 to 40 million passengers a year, and you need to ensure that you are getting an internal rate of return satisfactory to the investor, you need to adjust that rate.

“So we are trying to maintain a good rate of return for the government and the airport,” he explained.

The matter is being addressed at the parliamentary level in an Amendment of Collection of Airport Tax (international travelers) Act 7/78 Bill. However, Parliament is in recess until March.

GMR previously noted that the payment of a development fee was “a common concept in many airports globally”, particularly as a part of concession agreements where airports are privatised.

“The reason for the inclusion of ADC in many global concession agreements is to address the funding needs to meet the investment model required to upgrade and develop new airport facilities at significant costs,” GMR stated.

The company further claimed that the charge was included in the concession fee proposed between GMR and the government in 2010.

Speaking at the groundbreaking ceremony for INIA’s new terminal on December 19, 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.”

GMR’s 25 year concession agreement to construct and manage a new US$400 million terminal (to be competed in 2014) is the single largest foreign investment in the history of the Maldives.

Meanwhile, in April India’s Supreme Court ruled against the charging of airport development fees which are not approved by India’s Airport Economic Regulatory Authority (AERA). However Delhi airport, developed by GMR, continued to charge the fee as GMR had obtained permission to collect the sum in 2010.

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