macl – Page 4 – Minivan News

MIAL to take over airport operations by July 1, says Finance Minister

The government has declared it intends to transfer the operation of Ibrahim Nasir International Airport (INIA) from the Maldives Airports Company Limited (MACL) to a new state-owned company, Male International Airport Limited (MIAL).

Finance Minister Abdulla Jihad told local media that MIAL would take over the airport’s operations by July 1.

“The company has been registered. Now remains the work by MACL to hand over operations. It will begin soon, without delay,” the Finance Minister said, according to Sun Online.

“The new company will run the airport. The ownership of the airport will remain with MACL until arbitration is completed. But the work on transferring the employees and such will continue, when they take over operations. An official handover of the assets will also be conducted,” Jihad was reported as saying.

His comments follow the leaking of a letter recently sent to the Finance Ministry by Axis Bank, one of backers of the GMR-Malaysia Airports (GMR-MAHB) consortium which the government evicted from the Maldives in December 2012, after declaring the concession agreement signed under the former administration “void from the start”.

A copy of the direct agreement attached to the leaked letter showed the Finance Ministry guaranteed the loans taken by GMR-MAHB, which was signed and stamped in November 2008 by both MACL and then-Finance Minister Ali Hashim.

Axis Bank has called in the guarantee and is currently seeking US$160 million from the government and MACL. In the letter copied to both the Finance Ministry and MACL, the bank expressed concern that the government was attempting to turn MACL into a shell company while arbitration was pending, and warned it not to transfer the company’s assets or function to a new entity.

“Given that Axis Bank’s claim under the direct agreement is against MACL, you will understand that Axis Bank views with the greatest concern any attempt to dissipate the assets of MACL in favour of MIAL or any other third party,” wrote Axis Bank’s CEO Bimal Bhattacharyya in the letter, dated April 22.

“If MACL ceases to manage and operate Male’ airport, and MIAL instead performs that role, then MACL will lose almost all of MACL’s revenue stream, and become a shell,” he wrote.

The letter demanded the government “undertake not to allow any assignment, transfer or disposition of any of MACL’s rights to manage and or operate Male airport to MIAL or any third party… or allow MIAL or any third party to perform any function of managing or operating Male’ airport which is presently performed by MACL”.

“Please understand that Axis Bank views any dissipation of MACL’s assets with grave concern, and will take the necessary legal action to prevent such a dissipation”, the bank advised.

MIAL’s appointed CEO Bandhu Saleem at the time told Minivan News that “until the arbitration is complete, I think it will be very difficult to start a new company.”

Meanwhile, uncertainty over the fate of the airport and the outcome of both the arbitration process and the upcoming presidential election led the global body representing the world’s airports, Airports Council International (ACI), to issue an alert to its members advising them to “conduct due diligence while considering any investment in the Maldives, considering the latest developments, uncertainty of outcome of elections, the legal and financial risks of the current arbitration and the nascent legal framework.”

ACI informed its members that the takeover was the subject of arbitration proceedings expected to last 9-12 months, and further noted that as the government had guaranteed the bank loans used by the developer, these were also the subject of separate proceedings.

With elections scheduled for September, ACI advised it was possible that “any leadership changes arising out of the elections [could] have a material impact of the future of the Male’ airport and the decision of expropriation.”

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International airports body urges caution over foreign investment in Ibrahim Nasir International Airport

Airports Council International (ACI), the global body representing the world’s airports, has advised its members to exercise caution before making any investment in the Maldives relating to Ibrahim Nasir International Airport (INIA).

In an email obtained by Minivan News dated May 8, ACI alerted its members that the Maldivian government is “in the process of transferring the Male’ airport to a wholly-owned subsidiary of MACL and may explore a sale of equity in this entity to another airport operator.”

“ACI members are advised to conduct due diligence while considering any investment in the Maldives, considering the latest developments, uncertainty of outcome of elections, the legal and financial risks of the current arbitration and the nascent legal framework,” the email states.

The cautionary note emphasises that ACI was “not taking sides with respect to the decisions made by the various parties”, and matter-of-factly outlines the government’s sudden termination of the concession agreement with the GMR-Malaysia Airports (GMR-MAHB) consortium to manage and upgrade Ibrahim Nasir International Airport (INIA).

The government declared the 25 year concession agreement ‘void ab initio’ in November 2012 and gave the foreign investors seven days to hand over the unfinished airport to the government-owned Maldives Airports Company Limited (MACL).

While subsequent arbitration proceedings saw the Singapore Supreme Court endorse the government’s right to expropriate the airport, ACI noted that “this was subject to [the government] offering sufficient compensation pursuant to the concession agreement”.

“However on December 8 MACL/Government of Maldives took over the possession and control of the airport without payment of compensation”, the email stated.

ACI informed its members that the takeover was the subject of arbitration proceedings expected to last 9-12 months, and further noted that as the government had guaranteed bank loans used by the developer, these were also the subject of separate proceedings.

MACL and MIAL

On March 14, the government declared in a one-line statement that it was establishing by presidential decree a new 100 percent state-owned company, Male’ International Airport Limited (MIAL).

On March 31, President Dr Mohamed Waheed appointed MIAL’s board of directors, including tourism tycoon and Chairman of Universal Enterprises, Mohamed Umar Manik, as chairman, and Island Aviation Chairman Bandhu Ibrahim Saleem as managing director.

Other directors appointed included Thoriq Ibrahim of G. Noomaraahiya, Ahmed Munavvaru of Gaafu Dhaalu Madaveli Gahaa, Abdulla Yazeed of Dhaftharu, and Ibrahim Iyas of Dhaftharu.

The decision to form MIAL last month led GMR-MAHB’s lender Axis Bank to accuse the government of trying to turn MACL into a shell company, and warning it not to transfer MACL’s assets or function while arbitration was pending.

“If MACL ceases to manage and operate Male’ airport, and MIAL instead performs that role, then MACL will lose almost all of MACL’s revenue stream, and become a shell,” writes Bhattacharyya in the letter, obtained by Minivan News.

The letter calls on the government to “confirm or deny” its intentions by April 25, and “undertake not to allow any assignment, transfer or disposition of any of MACL’s rights to manage and or operate Male airport to MIAL or any third party… or allow MIAL or any third party to perform any function of managing or operating Male’ airport which is presently performed by MACL” by April 27.

“Please understand that Axis Bank views any dissipation of MACL’s assets with grave concern, and will take the necessary legal action to prevent such a dissipation”, the bank advised.

MIAL’s appointed CEO Bandhu Saleem confirmed to Minivan News that the government did intend MIAL to manage the airport, but said the process of transferring that responsibility over from MACL had run into “hurdles” relating to its current legal issues.

“The board has been appointed, but I have not yet taken on the role,” he said, noting that the new company was waiting on government clearances and had yet to be officially created.

“Until the arbitration is complete, I think it will be very difficult to start a new company,” he added.

Axis Bank loans and compensation claim

A legal submission detailing the Axis Bank dispute, also obtained by Minivan News, notes MACL’s failure to notify Axis Bank of its intention to terminate the concession agreement within 60 days, as required in the bank’s direct agreement.

An included copy of the November 24, 2010 agreement, in which the Ministry of Finance guarantees the loans to GMR-MAHB, is signed and stamped by both then-MACL Chairman Ibrahim Saleem and Finance Minister Ali Hashim on behalf of the government.

The document shows that Axis Bank is seeking the repayment of US$160 million by the government of Maldives due to MACL’s breaching its obligations under the agreement.

At the same time, the governor of the Maldives’ central banking authority recently warned parliament that the Maldives’ gross state reserves had fallen to little more than US$300 million, after the government was compelled to repay a series of US$50 million loans the State Bank of India declined to roll over at the start of 2013.

Repayment of the Axis Bank loan could place the Maldives in a position where it has less than a month of imports in reserve – a potential crisis for an island nation 100 percent dependent on imports for basic subsistence.

The government meanwhile contends that it is not subject to termination and associated clauses relating to a contract it has deemed ‘void from the outset’.

“Under the terms of the direct agreement, these loans would be repayable if the concession was terminated early, as defined in the direct agreement. The government contends, however, that if the concession agreement is void ab inito, then these terms do not apply,” reads a special audit commissioned by the Auditor General.

Present situation

With arbitration pending and efforts to create a new management company having apparently stalled for the time being, the outlook for the airport remains uncertain.

Much will be dictated by the election in September. Former President Mohamed Nasheed has said he will invite GMR-MAHB to return should his party resume government, while the Progressive Party of the Maldives (PPM) has declared one of GMR-MAHB’s most voracious opponents, ex- Home Minister Dr Mohamed Jameel, as the party’s Vice-Presidential candidate.

The government’s special audit of the project shows the upgrade and construction of the new terminal was 25 percent complete as of October 31, 2013.

“In the meantime, all work on the ground on the improvement to the airport has ceased. Sensitive elements of the new structures that had been planned by [GMR-MAHB] are incomplete and exposed to the weather and at risk of damage – possibly closing off the option of re-using these elements to reduce the cost of any future development of the airport,” the report noted.

Former Transport Minister Dr Ahmed Shamheed, who was dismissed by the government in November 2012, warned in January 2013 the airport needed urgent work to reach acceptable standards, that was outside local capabilities.

“To get the airport to the right level, they will need to bring in outside help,” he told Minivan News at the time.

“The airport is in very bad shape right now and work is needed on the runway, all of which cannot be done without finance.”

Ibrahim Nasir International Airport was meanwhile dubbed the ‘Indian Ocean’s Leading Airport 2013′ at the Indian Ocean World Travel Awards on May 12.

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MACL pays STO US$7.5 million in overdue jet fuel charges

The state-owned Maldives Airports Company Limited (MACL) has settled US$7.5 (MVR115 million) in outstanding jet fuel charges.

The payments, owed to the State Trading Organisation (STO), were left outstanding from before the government opted last November to void a contract with Infrastructure group GMR to manage and develop Ibrahim Nasir International Airport (INIA).

A deadline for payment of the bills had reportedly been set by the STO for December 2012, but was delayed after Singapore’s Supreme Court overturned an injunction blocking the Maldivian government from voiding its sovereign agreement with GMR.

STO Managing Director Managing Director Shahid Ali has said that after the state-owned MACL took over management of the site from GMR late last year, it also took on the developer’s existing contracts and therefore had been required to pay the outstanding fuel charges, local Newspaper Haveeru reported.

MACL is requested to pay a further US$2.5 million (MVR38.3 million) in unpaid fuel bills.

According to local media, GMR had signed a US$150 million (MVR2.3 billion) jet fuel supply deal in March last year that is set to expire in April 2013.

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MACL Managing Director appointed as Transport Minister

President Mohamed Waheed has appointed Mohamed Ibrahim as Minister of State for Transport and Communications after removing him from his Managing Director post at Maldives Airports Company Limited (MACL).

Replacing Ibrahim as MD of MACL is Dr Ibrahim Mahfooz, who has served as the Chief Internal Auditor of State Trading Organisation (STO) for the last 16 years.

Mohamed Ibrahim will be taking over from Acting Transport Minister Mohamed Nazim.

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Maldives without budgetary provisions to cover GMR’s US$800m compensation claim

Financial authorities in the Maldives have said no budgetary provisions presently exist to cover an estimated US$800 million in compensation being sought by Indian infrastructure group GMR after the government abruptly terminated its agreement to develop Ibrahim Nasir International Airport (INIA).

Finance Minister Abdulla Jihad told Minivan News today that no mechanism was currently budgeted should the Maldives face a multi-million US dollar bill for evicting GMR, but stressed it was not for the company to decide on any eventual payment.

GMR has said that the proposed US$800 million claim was based on its “provisional estimates” and that the company had also taken into account the Maldives’ ability to cover such payments if compensation was awarded by the Singaporean courts overseeing arbitration.

However, Jihad today played down fears that any potential fine could prove perilous for the Maldives’ economy, as well as attempts to reduce its spiralling budget deficit, stating that any possible fines would be set by the Singaporean arbitration court hearing the dispute.

“We will deal with the matter when we know the amount of compensation to be paid,” he said. “GMR cannot decide, it will be down to the court [hearing the arbitration].”

Jihad also claimed that there had been no communication between GMR and the Maldives government over compensation as the matter was presently being dealt with through arbitration.

“There has been no communication [with GMR] over the levels of compensation,” he said.

Budget battle

With the compensation case pending, the Maldives government is this month attempting to reduce its spending as it also faces calls to cover debts from its neighbours and pressure from the International Monetary Fund (IMF) to reduce a ballooning fiscal deficit and protect dwindling state reserves.

The Indian government last month requested that the Maldives repay US$100 million in treasury bond funds by February 2013 – a matter it claimed was not related to a diplomatic row over the airport dispute at the time. Local media has previously reported that state reserves could fall to just US$140 million (MVR2.2 billion) once the payments are settled.

It is amidst these budgetary challenges that GMR has said it was seeking up to US$800 million in compensation following the termination of its US$511 million concession agreement signed under the former government back in 2010.

“Preliminary estimate”

GMR’s chief Financial Officer (CFO) Sidharath Kapur told Minivan News today that the sum was a “preliminary estimate” based on a number of factors including investments made by the company, debt equity and loss of profits as a result of the contract termination.

Kapur added that on Tuesday (December 11) the company had communicated with Maldives Ministry of Finance by sending an official letter outlining its concerns that the contract had been “wrongfully” terminated without respect for the agreed procedures.

Speaking to the India-based Economic Times newspaper today, Government Spokesperson Masood Imad suggested GMR had been a victim of failing to perform proper due diligence before signing a contract with the former government – which was ousted following a police and military mutiny in February 2012.

A particular point of contention for GMR during the contract’s lifetime was an Airport Development Charge (ADC) – a US$25 fee for outgoing passengers stipulated in the concession agreement – which was blocked by the then-opposition Dhivehi Qaumee Party (DQP) in the Civil Court on the grounds that it was a tax not authorised by parliament.

Former President Nasheed’s administration chose to honour the original contract, and instructed GMR to deduct the ADC revenues from the concession fees due the government, while it sought to appeal the Civil Court ruling.

However, the Nasheed government fell in February 2012 and the opposition inherited the result of its court victory, receiving a succession of bills from the airport developer throughout 2012, despite the government’s insistence that the January 5 letter from MACL outlining the arrangement was no longer valid.

Government spokesperson Imad alleged that the ADC dispute has resulted from a lack of transparency by the former administration. “We feel the former government should have been transparent with GMR on the ADC issue,” he was quoted as telling the Economic Times today.

However, Kapur rejected the governments’ claims, stressing that its tender agreement to develop INIA had been overseen by legal and financial experts including the International Finance Corporation (IFC), a World Bank entity, as well as the certified approval from the former Attorney General Ahmed Ali Sawad.

“The IFC had clearly said that there are no further approvals required for the ADC. We were in compliance with all laws and all approvals had been taken as backed by the then attorney general of the Maldives,” he said. “Beyond that, what further due diligence could we do? Any international bidder would have taken comfort in that level of due diligence.”

With GMR’s calls for compensation currently being heard by the Singaporean judiciary, Kapur said the company believed there was a high probability it would be awarded financial remuneration to be paid by the Maldivian government.

Pointing to the verdict given by the Supreme Court in Singapore earlier this month, Kapur said that in allowing the Maldives government to expropriate the airport, the provision of compensation was required to be given to the company.

“What the appellate court has said is that appropriate compensation must be paid. [The Maldives government] have the right to do as they wish as long as compensation is paid, this is binding on the Maldivian government,” he said.

While expecting a favourable outcome in its calls for compensation, Kapur added that the company was aware of the Maldives’ present financial vulnerabilities as well as its ability to cover any such payments.

“The possibility of getting compensation is high, but [the Maldives government’s] ability to pay is unknown,” he said.

Kapur added that in other international tribunal cases such as this, there were a number of methods that a court can use to ensure compensation is implemented. However, he said it was still too early to speculate on what form these methods may take in the case of the INIA dispute.

“Specific mechanisms”

Meanwhile, in a letter sent to the Maldives’ Ministry of Finance and Treasury, Andrew Harrison, CEO of the GMR Male International Airport Limited (GMIAL) that ran INIA under the agreement, reiterated the company’s argument that there had been “specific mechanisms” established to terminate the contract under specified circumstances.

“There is no suggestion that any of the circumstances arose,” the letter was reported to have read, according to the Economic Times.

Harrison was also said to have claimed that despite the present government’s stand that the contract was “void ab initio” or invalid from the beginning, the government “also warranted and specifically represented that the Concession Agreement was valid, legal and binding.”

“Further, as part of the closing of the financial transaction on 28 December 2010, the then Attorney General of the Maldives rendered a formal legal opinion confirming that the Concession Agreement was lawful,” the letter was said to state.

Minivan News was trying to obtain a copy of the letter at the time of press.

Smooth takeover

Management of INIA was taken over by the state-owned Maldives Airports Company Ltd (MACL) on Saturday (December 8 ) after the Singaporean Supreme Court had overturned an injunction blocking the Maldivian government from voiding its concession agreement with GMR.

Both GMR and the MACL have this week praised the management handover as “going smoothly” as the government began planning for the future of INIA beyond the aborted privatisation plan. The termination of GMR’s contract officially ended the largest single foreign investment project in the country’s history.

On Tuesday (December 11), the Maldives cabinet recommended the formation of a government-owned company to run Ibrahim Nasir International Airport (INIA)

Looking towards the future of the airport, the cabinet recommended that Male’ International Airport Ltd be formed with 100 percent government shares, while claiming full authority to operate and develop INIA through a special contract with the Maldives Airports Company Ltd (MACL).

Speaking to Indian media earlier this week, President Dr Mohamed Waheed Hassan Manik has dismissed suggestions that China urged the Maldives to push out the Indian company.

“The only significant cooperation we have with China at this time is through development assistance… like building the museum, housing projects. I don’t think India should worry about it at all,” Waheed was quoted as saying in the Hindu newspaper.

The claims were made as Maldives Defence Minister Colonel (Retired) Mohamed Nazim departed to China for a five-day official visit said to be focused on securing its assistance in developing the Maldivian military.

The President had claimed that the Maldives was presently “not looking for a foreign investor” to develop the international airport, with the government announcing that it was undecided on whether any new privatisation agreement would be sought in future.

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Cabinet proposes government form own company to oversee Male’ airport development

The Maldives cabinet has recommended forming a government-owned company to run Ibrahim Nasir International Airport (INIA) following the state’s decision earlier this month to nationalise the site, voiding the largest ever foreign investment project in the country’s history.

President Dr Mohamed Waheed Hassan was yesterday advised to form Male’ International Airport Ltd to operate INIA after its termination of a concession agreement with India-based GMR to manage and develop the site for 25 years.

According to the President’s Office website, cabinet recommended that Male’ International Airport Ltd be formed with 100 percent government shares, while claiming full authority to operate and develop INIA through a special contract with the Maldives Airports Company Ltd (MACL).

The MACL took over management of the airport from GMR on Saturday (December 8).

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MPs express concern over Addu airport bidding process, while AIA MD Shahid denies corruption allegations

Jumhoree Party (JP) Leader, MP, and chairman of the Villa Group of businesses, Gasim Ibrahim, denied in parliament today that he had spoken against the sale of shares of Addu International Airport (AIA) with the intention of buying shares himself. He claimed he had done so “in the best interests of Addu and the country.”

“If Gasim wanted shares, Gasim would have bid for them,” Gasim said in response to some MPs, who had alleged he was himself interested in buying the shares.

Referring to his offer in his letter to President Mohamed Waheed Hassan to reclaim land for the project free of charge “using my own dredger, employees and machinery with the government only providing oil,” Gasim said that the costs of the work would come up to US$7 million.

“I am very concerned that they have gone ahead and sold the shares without even considering the offer of free aid of this size,” Gasim said.

Gasim further stated that although he did want to see the Addu airport developed, the shares had not been sold in the right manner, adding “things won’t go very well” due to how the shares had been given away.

JP MP Alhan Fahmy echoed Gasim’s statement that he, too, wished to see the Addu airport developed, but that he was concerned with how the sale of shares had been carried out. Fahmy said that 30 percent of shares being sold off for MVR 60 million (US$3.89 million) was “nothing but daylight robbery”.

“The shares have been sold far too cheaply. Our problem is that they’ve done this while there are many other ways obtain the funds needed for development,” Fahmy explained.

A number of MPs from the Maldivian Democratic Party (MDP) stated that the party supported the concept of privatisation, adding that the development of the Addu airport was originally an MDP initiated plan. They, too, however, expressed concerns over how the bidding process had been carried out.

MDP Parliamentary Group’s Deputy Leader Ali Waheed criticised Gasim Ibrahim for his “lack of conviction” when speaking about the issue in parliament.

Waheed said that Gasim had not dared to criticise the government even after it had sold the shares, despite Gasim’s allegations that major corruption had been involved in the deal.

Referring to Gasim’s common name “Buruma” (‘drill’), Waheed said, “There is no use for a drill without electricity”, alleging that the JP leader had been “too cowardly” to even speak of the issue openly during today’s parliamentary session.

“Cowards need not contest in the coming presidential elections,” Waheed further declared.

Gan Airport development to start in January: Shahid

MD of AIA and STO Shahid Ali said in a press briefing on Monday that the Addu Airport development work is set to begin in January.

Ali said that the pre-bid meetings had been held with the three shortlisted contractors and that the bids were scheduled to be submitted by November 28.

The development plans include an extension of the runway, repairing of the apron, placing an extra layer of tar on the runway and setting up a sea plane base.

He also stated that contrary to general speculation, the airport had not been “sold”, but rather shares from the company AIA that had been sold to KASA Holdings.

He also refuted allegations of corruption, saying that KASA Holdings had been given higher priority since it was a local company and that all proceedings had gone through the bidding process in a matter which was completely free of any corruption.

“It is often said now that 30 percent of the airport has been sold to a private party. The truth is that 100 percent of the land of Gan, the infrastructure of the airport and its facilities are with the government, because Gan Airport Ltd is a company which is 100 percent owned by the government. So all the assets are owned by them. Then this company has leased the airport to AIA for 50 years,” Ali explained.

Ali said that therefore it was clear that selling 30 percent of the shares of AIA, a joint company formed by the Gan Airport Ltd, STO and the Maldives Airports Company Ltd, was not a sale of the airport itself.

Leave politics aside

Addu City council has released a statement welcoming the signing of the contract which they said would lead to the development of the Addu airport.

The statement further notes “the importance of leaving politics aside and for the good of citizens in letting the venture bring positive changes to Addu’s economy.”

Meanwhile, MDP released a statement on Monday urging “not to let political feuds, political needs and power play interfere in important work directly related to the development of Addu City citizens, and generally all Maldivian citizens.”

The statement also condemned Gasim’s threats against Shahid Ali, stating “This party calls on political leaders to refrain from making unlawful threats through the greed for power and political wants.”

In a uncommon move, 18 citizens from Addu held a press conference on Monday, speaking in support of the Addu airport development.

The citizens welcomed the selling of shares to KASA Holdings, stating that it was not a sale of the airport itself. They further said that the citizens of Addu were happy that although the airport has so far remained the same, development work is scheduled to begin early next year.

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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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Transport Minister backs MACL, orders GMR to pay US$8.2 million

The Transport Ministry has said the government is “fully behind” an order given by the Maldives Airports Company Limited (MACL) to India-based infrastructure giant GMR, that it pay the sum of US$8.2 million deducted from concession fees for the first quarter of 2012.

GMR took over the management of Ibrahim Nasir International Airport (INIA) – then called Male’ International Airport – from the government-owned Maldives Airports Company Limited (MACL) in September 2010.

Speaking to Minivan News today, Minister of Transport Dr Ahmed Shamheed said the government fully backed an MACL order for GMR to return the US$8.2 million it deducted from concession fees for the quarter.

According to a statement released by the MACL earlier this month, the company said it had 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 the Airport Development Charge (ADC) and insurance surcharge.

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 GMR in 2010. The anticipated US$25 million the charge would raise was to go towards the cost of renovating INIA’s infrastructure.

The deductions were made after the Civil Court blocked the India-based company charging an Airport Development Charge (ADC) last year, on the grounds that it was a tax not approved by parliament. As the ADC was stipulated in the contract former President Mohamed Nasheed’s administration had signed with the airport operator, the government at the time agreed that GMR would deduct the charges from the concession fees due the government, pending appeal.

The Civil Court case had been filed against the airport by the former opposition Dhivehi Qaumee Party (DQP) – now part of President Mohamed Waheed Hassan’s coalition government.

Parliament’s Finance Committee has meanwhile revealed that the Maldives is facing a skyrocketing budget deficit of 27 percent for 2012, and a parallel 24 percent increase in expenditure.

Last week, GMR released a statement proposing a compromise to the government whereby Maldivian nationals would be excluded paying the ADC when departing the airport.

MACL stance

MACL Managing Director Mohamed Ibrahim told local media today that MACL’s agreement with GMR under the previous government to deduct the ADC payment was “null and void”. Ibrahim told reporters that the deal was no longer relevant as it had been agreed by a former MACL chairman, and that charges could therefore no longer be deducted from GMR’s concession payment.

“We had informed that the letter from the former Chairman of MACL was now invalid and hence must not be followed. In addition we had also informed that no deductions can be made from the concession fee,” he told local newspaper Haveeru.

Ibrahim was not responding at time of press.

The MACL order was announced the same day that President Mohamed Waheed reportedly assured Indian Prime Minister Manmohan Singh that the government would uphold its commitments to foreign investors.

“It is only recently that the Maldives began working with large foreign corporations, and hence the Maldives has not much experience in dealing with large companies. That’s why we are currently trying to iron out some of these issues through mutual dialogue,” President Waheed said.

Transport Minister Dr Shamheed however told Minivan News that the President’s pledge would not affect MACL’s decision to order GMR to pay the deducted US$8.2 million.

“As per the concessions agreement, a fee has to be paid to MACL. That is my understanding,” he said.

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