Male International Airport leasing deal signed after Maldives government appoints four new MAC board members

The Maldives government signed the 25 year lease agreement with India’s GMR Infrastructure today after appointing four new members to the Maldives Airport Company board ,according to Haveeru.

The signing ceremony came hours after the Majlis passed an amendment to the Public Finance Act, specifying that state assets could only be leased or sold with the approval of the Majlis.


Failure to upgrade airport could lead to ICAO blacklist: aviation expert

An aviation expert unconnected with the government or bidding process, and with extensive experience of Male’ International Airport, has told Minivan News on condition of anonymity that the state of arguably the country’s most critical piece of economic infrastructure “is far worse than most people realise” and in “urgent need of major investment”.

“The runway hasn’t been resurfaced for 18 years, and it still has cracks and depressions caused by the 2004 tsunami,” he explained.

“Even now there are spots which need to be cut out and resurfaced,” he said, naming several international carriers that had privately expressed concern to the authorities about minor damage caused to their planes by the state of the runway.

Furthermore, the airport does not meet NX14 standards of the International Civil Aviation Organisation (ICAO) because of the proximity of buildings to the runway, the source said.

“The last time ICAO did audits they were not satisfied. If the airport is not upgraded, the worse case scenario is that ICAO will blacklist the airport – and that means nobody will land here. I’m not scaremongering, but the airport needs major investment,” he said.

“I don’t think the politicians understand the situation,” he explained. “The runway needs urgent repair and maintenance, and aircraft from places like Germany – that have travelled over 10 hours with 300 passengers on board – are being held above the airport for 14-20 minutes waiting for a parking space. This is especially a problem during the European winter (peak arrivals).”

Private jets were occasionally being diverted to airports such as Trivandrum and Colombo because of a lack of parking space, denying the government a stream of income, he added – “and there’s no standard of parking, it’s like a haystack.”

The “geometry and design of the airport” were fundamental limitations of the current layout, he noted, but both the current and previous governments were financially unable to invest the significant amount of money required to repair and upgrade the facility.

“In 2006 the former government contracted UK company Scott Wilson to draw up a masterplan, with three options costing US$300 million. The government could not find the funding to go ahead with it,” he said.

“We’re at a crossroads – either it gets privatised now, or it never does. It needs urgent and necessary expansion, and the runway needs to be repaired,” the source explained.

“If people do not agree with the airport being privatised like this, they should come to the bargaining table with something better – there are many multi-millionaires in Male’ who could co-operate on this,” he said.

“It’s not about airport revenue – plenty of countries privatise their airports. But in the Maldives the whole economy is completely dependent on incoming tourists, and most of the [financial] benefits are downstream [at resorts]. At the end of the day the country benefits by having a good airport.”

Not in national interest: opposition

Yesterday evening a coalition of opposition parties, including the Dhivehi Rayyithunge Party DRP), the People’s Alliance (PA), the Dhivehi Qaumee Party (DQP) and the Jumhooree Party (JP), accused the government of acting outside the national interest over the privatisation of Male’ International Airport, and signed an agreement to try and halt the process “inside or outside parliament” after the government accepted a bid from GMR-KLIA.

This afternoon a planned signing ceremony at the President’s Office in front of assembled media was first postponed and then reschedued for Wednesday, with Chairman of the Privatisation Committee Mahmood Razee claiming that the “documents were still pending.”

Daily newspaper Haveeru reported that the signing was cancelled because of disputes among board members of the incumbent airport operator, Maldives Airports Company Limited (MACL), over who would sign the document.

The GMR-KLIA bid accepted by the government will involve an upfront payment of US$78 million and one percent of the airport’s profit until 2014, increasing to 10 percent from 2015 to 2035. GMR will also pay 15 percent of fuel trade revenues to the government in the first four years, and 27 percent from 2015 to 2035.

The two other bids – from Turkish TAV Airports Holdings Company/French Airports De Paris and Swiss Flughafen Zurich AG/GVK Airport Developers – involved substantially less upfront sums but 2-3 times the profit sharing over the life of the agreement.

The statement signed by the oppositition parties condemning the government’s decision to give the airport’s management in control of a foreign company, said the decision was “not made with the intention of benefiting the country’s economy” and that they would seek legal advice.

“[The airport] is one of the most valuable assets of the Maldives and it has a direct link to the independence of the state,” the statement said.

Last week DRP Deputy Leader Ibrahim Shareef accused the government of pushing the privatisation deal through without seeking approval from parliament, and said the DRP “will not honour this type of shady deal” if returned to power in 2013.

Razee meanwhile hit back at the opposition’s unspecified allegations of corruption, explaining that the World Bank’s International Finance Corporation (IFC) had been involved in the privatisation process as a transaction advisor since July 2009, “and would certainly not stand by if conduct was improper.”

“We started this process in December 2008. It was not something we thought up yesterday,” Razee said.

IFC representatives said they would not comment on the matter.


Maldives opposition parties allege corruption in Male International Airport privatisation deal

Corruption is rife in Male International Airport privatisation process, according to the Dhivehi Rayyithunge Party (DRP), the Peoples Alliance (PA), the Dhivehi Qaumee Party (DQP) and the Jumhooree Party (JP). The opposition parties have signed an agreement to work against the privatisation process.

The government’s haste in the bidding process, at a time when there is a bill pending in the Majlis which would regularise the process of selling public assets, is troubling and a case would be lodged with the anti-corruption commission, say the president of DQP, Dr. Hassan Saeed and the president of People’s Alliance, Abdulla Yameen.

Saeed also noted that the move comes at a time when public confidence in the government is at rock-bottom. The airport should be developed by the Maldives Airports Company (MAC), according to Saeed, and if the same provisions which the government is allowing for GMR were allowed for MAC, it would be able to develop the airport.

They also said that a Majlis amendment is necessary to raise the airport service charge from US$18 to US$25, which the government has promised to GMR.

Experts have said that privatisation of US airports was one reason which led to 9/11 attacks in US, said Yameen, and privatisation could cause loss of revenues to companies which operate through the airport, such as Island Aviation Services. GMR’s fuel charges, airport tax and charges for flights landing at the airport could cause tourist arrivals to decline, he said.

Because of the financial and economic crisis, this is not the best time to sell an asset like the airport, Yameen said, and in the bidding process, highest marks should not be given to the company which pays the largest amount upfront, but to the company which gives the most throughout the lease period.

The government has never requested money for the airport development from the Majlis, Yameen said.

GMR should consider the views of the people and the opposition parties before making a final decision, said Dr Hassan Saeed in response to a question from Miadhu Daily. “Even if they sign the agreement, and even if they take over management of the airport, we will do whatever we can to cancel the agreement. We will go to Court, and I have a guarantee that we can win this case.”

Haveeru Online reports the Bangalore-based GMR has proposed to pay US$78 million (almost Rf1 billion) upfront to the Maldivian government, one percent of the total profit in the first year (until 2014) and 10% of total profit from 2015 to 2035. The company also agreed to pay 15% of fuel trade revenues in the first four years and 27% from 2015 to 2035.

President Nasheed has said that with privatisation, “the government will be able to save over US$300 million in investments.” The government had launched the airport tender process in October 2009. The President said the International Financial Corporation, a member of the World Bank Group, worked with the government throughout the process, and he was “confident the tender process was transparent and ensured there was no room for corruption.”

The GMR group is named after its founder G. M. Rao, and Kiran K Gandhi is chairman of its airports division.


Qatar further expands routes across Europe and Asia

Qatar Airways has announced the launch of six new routes in Europe and Asia in 2010, servicing Phuket, Hanoi, Nice, Bucharest, Budapest and Brussels.

Qatar already connects Male’ International Airport with hubs including Doha, Heathrow, Dubai, Abu Dhabi, Frankfurt and Cairo.

Qatar Airways CEO Akbar Al Baker said the new routes were underserved “and so are excellent opportunities for us to tap into.”

“We spend a lot of time diligently analysing new route opportunities and I am pleased to say that the routes being announced today will not only open up new markets, but also strengthen our network strategy over our Doha hub,” he said.


Eight parties bidding for Male’ International Airport

The ministry of economic development has announced plans to develop Male’ International Airport.

Eight parties have shown interest in developing the airport, and the government will receive the bid proposals from next week, reports Miadhu.

The government has previously said the cost of developing the airport is prohibitive and it should instead be opened to private investment.