Civil Court issues injunction against termination of Palm Beach Resort and Spa management agreement

The Civil Court has issued an injunction temporarily blocking a decision by the head leaseholder of the Palm Beach Resort and Spa to terminate a sub-lease agreement with the property’s current management.

The Ministry of Tourism, Arts and Culture has confirmed that the resort, based in Lhaviyani Atoll, is to remain under the management of Sun Sporting Holidays Limited until the conclusion of a court case to determine the legality of terminating the companty’s sub-lease agreement.

“Sun Sporting Holidays filed a case against the leaseholder and the court issued an order stating that the termination notice should be suspended until the court decided whether the termination is lawful of not,” Tourism Ministry Senior Legal Officer Faseeh Zahir explained to Minivan News.

“So, the ministry accordingly extended the temporary permit for resort operation to Sun Sporting Holidays,” he said.

No date has yet been set for the next hearing in the case, according to the ministry.

In a document (part 1, part 2, part 3) dated July 15, 2013,  Leaseholder Ibrahim Ali Maniku issued a notice of termination for the agreement between himself and Sun Sporting Holidays Limited to operate the Palm Beach Island Resort and Spa.

He wrote that the decision was based over concerns the company, as sub lessee, had failed to meet a number of safety standards and mandatory requirements set out by the Tourism Ministry and other local authorities.

Citing a Tourism Ministry report from April 11, 2013 – Number: 88­QAR/PRIV/2013/604 – the notice alleges that of 97 observations and violations noted by authorities at the time, 61 were considered serious and in need of immediate rectification.

According to the leaseholder, a maximum period of no more than three weeks from the publication of the report were provided for any short comings or violations raised by the ministry to be dealt with by management on the site.  The notice does not clarify if the required changes were made within the deadline.

The leaseholder however alleged that 14 “major violations” of the General Regulation for Food Establishment and Service of Maldives (2007/182/FSI) raised by the Tourism Ministry had not been corrected during a further inspection held a month later.

The notice claimed that Sun Sporting Holidays had also failed to register the property’s desalination plant with the Environmental Protection Agency (EPA), as well as ensuring the resort’s power system was approved by the Maldives Energy Authority (MEA).

Concerns were also raised in the document over the EPA’s conclusions concerning the impact of severe erosion on the island’s coastline, which is claimed to have led to serious damage to the site’s ‘‘A la Carte’ restaurant as well as the loss of 17,953 square metres of land since the sub-lease agreement had come into force.

The notice claimed the sub lessee had additionally failed to comply with the EPA’s recommendations of relocating the resort’s reverse osmosis desalination) intake away from “the site where sewage is discharged”.

Sun Sporting Holidays was also accused by the leaseholder of failing to address recommendations by the Maldives National Defence Force (MNDF) to repair the resort’s fire alarm and fire hydrant systems that had previously been found to be out of order, while also failing to prepare and practice drills as part of an emergency fire plan.

When contacted by Minivan News this week, Sun Sporting Holidays said Palm Beach Resort and Spa remained under its management and was being operated as normal.

However, the company declined to comment further on the termination notice sent by the island’s leaseholder while legal action into the matter was ongoing.


Renewable energy prices posed with high potential

The cabinet has set prices for government-owned utilities companies to purchase renewable energy as part of an investment scheme to bring the Maldives closer to its carbon neutral goal.

“We think renewable energy has a lot of potential, it is why we are in the business. We think this is where things should be going,” said Renewable Energy (REM) Director Hudha Ahmed. Noting that diesel rates are currently higher than projected solar energy rates, she said solar energy is a more reliable source long-term.

According to the Cabinet’s decision, State Electric Company Limited (STELCO) can buy a unit for Rf3.42. South Central Utilities Limited will be charged the highest rate per unit (Rf5.39), and Upper North Utilities Limited can buy a unit for Rf4.44. Units are available to Northern Utilities Limited for Rf4.40, Central Utilities Limited for Rf3.97, and Southern Utilities Limited for Rf3.94.

The Maldives currently aims to cut carbon emissions by 60 percent using solar power. Currently, no company is carrying out a commercial renewable energy project in the Maldives.

STELCO, which just received the rates and is awaiting conditions from the Ministry of Housing and Environment, said there are plans to provide renewable energy locally.

“We have some projects which are being planned, mostly in solar and wind. One solar project is expected to be commissioned in a few weeks,” said STELCO Chief Technology Officer Mohamed Zaid.

Since signing the Copenhagen Accord in January 2010 the Maldives has focused on decarbonising the electricity sector, which accounts for over 31 percent of industrial project expenses.

Decarbonising the country is expected to cost the Maldives US$3-5 billion over the next 10 years.

The rates approved by the Cabinet were researched and recommended by Maldives Energy Authority. Deputy Director Ajwad Musthafa said the rates were calculated according to fuel prices in each region and differences in fuel efficiency.

“The amounts we set were about 10 percent cheaper than they currently are in diesel,” Musthafa said.

Over 25 percent of the Maldives’ GDP is spent on diesel used for boats alone.

Consumers won’t be affected by the plan, which currently targets investors only and is likely to be lucrative, he added.

“As it stands now, a person can put a solar panel in his home and send the power to a grid. Having invested in energy production, that person can expect a six to seven year payback period before making a profit, which are expected to grow significantly with time. Currently, there is no mechanism in place between the investor and the utility company, but I believe it is being developed,” said Musthafa.

He observed that the system would be especially attractive to people in the Upper South and South Central regions, “where energy prices and feed-in tariffs are higher.”

In September, the Maldives signed the Renewable Energy through Feed-In Tariff in an effort to reduce electricity costs by promoting a shift from oil fuel to renewable energy sources.

“The existing system is fairly inefficient in these areas,” he said. “About fourteen years back the government was charging an Rf3.5 flat rate for energy. We got complaints from investors, so now we are trying to make it more exciting for investment.”

Earlier this month the Maldivian government solicited bids from solar power companies to power 29 islands, which are facing power generation difficulties. Many small islands have small power stations, which are expensive and yield disproportionate returns.

As fuel prices increase, Musthafa explained, so will the feed-in tariff, and the overall price of diesel is unlike to drop in coming years. By comparison, locally-produced solar would be a valuable option.

Musthafa said a buyer’s mechanism was being developed and would be implemented in due time. “Right now, we want to create a market that offers transparent, confident investments,” he said, adding that foreigners are expected to play an important role.

“Foreign investors will only have to sign a power purchase agreement. Nothing has to be taken from the government’s side,” he said. Local companies are also expected to benefit from external support provided by foreign investors.

Past the investment phase, the solar plan includes capacity development, training and awareness programs on renewable energy, and methods to make the investment more affordable, including concessional loans.

“Our hope is that by early next year we will have the proper institutional set up to make this happen,” Musthafa said.


Previously, this article stated, “As it stands now, a person can put a solar panel in his home and send the power to a grid…Currently, there is no mechanism in place between the investor and the utility company, but I believe it is being developed.”

It should have read, “As it stands now, a person can install a solar panel in his home and sell the power to a grid…We have already established a set of technical guidelines and application procedures for Solar PV installations. Additional regulations are being developed.”