Indian infrastructure company GMR has told media of its surprise that the development of Ibrahim Nasir International Airport (INIA) has been given to a Chinese firm.
“Sources in the GMR expressed surprise at the move by the Maldives government as it has entered in a new contract for construction work at airport without paying damages as suggested by the tribunal,” wrote the Economic Times today.
The preliminary contract agreement for the development of the airport was one of eight MoUs signed between the Chinese and Maldivian governments during the recent presidential visit by the Chinese President Xi Jinpeng.
The terms of the agreements have not yet been released to the media, though it was revealed that the new contract to develop the airport was given to Beijing Urban Construction Company Limited.
President Xi’s visit to the Maldives – part of his South Asia – tour was reported to have added to Indian concerns regarding Chinese ambitions in the region.
India’s GMR recently won the arbitration case filed against the Maldivian government claiming compensation for the premature termination of its airport development agreement made in 2012 during former President Mohamed Nasheed’s administration.
The company’s significant development plans included the construction of a new terminal and investment plans in excess of US$500 million.
The two phase arbitration case will now focus on determining the compensation owed by the government, with GMR claiming US$1.4 billion, a figure which amounts to around half the Maldives’ Gross Domestic Product (GDP).
Speaking about the arbitration case, Attorney General (AG) Mohamed Anil said that the compensation has been limited by a clause inserted during the original agreement, suggesting that the amount will not go up to the full amount being claimed.
Tourism Minister Ahmed Adeeb has since assured that the government has the capacity to pay the compensation.
“Our economy will grow with the special economic zone bill, and our government will become rich, we will overcome our budget deficit and god willing we will be able to pay any amount we have to,” he said shortly after the ruling in June.
GMR initiated the tribunal at a Singaporean Court after former President Dr Mohamed Waheed’s administration concluded that the GMR contract was void, giving the company seven days to leave the airport.
Speaking at a press conference, then AG Azima Shukoor stated that the decision to terminate the contract was reached after considering “technical, financial and economic” issues surrounding the agreement.
In response, GMR released a statement saying that the cabinet’s decision was “unilateral and completely irrational.”
The GMR case also appeared to prompt a cooling in diplomatic relations between India and the Maldives, with India tightening visa regulations for Maldivian travelers claiming that that decision had been made to draw attention to the treatment of expatriate workers within the Maldives.
While relations have improved during the presidency of Abdulla Yameen, Indian officials were reported to have expressed concern over President Xi’s visit this week – the first by a Chinese head of state to the Maldives.
“We’ve been off the ball a bit on the Maldives, and things are tricky again,” an official told the Telegraph. “The Chinese President’s visit to the Maldives is emblematic of that simmering unease.”
During his visit President Xi urged the Maldives to become part of his 21st century maritime silk road project, as well as signing an MoU for the promotion of a bridge between Malé and Hulhulé islands. Xi expressed his hope that the bridge would be named the ‘China-Maldives Friendship Bridge’