Tag: oil

Oil drilling and Maldives’ tourism “cannot coexist”, says NGO Bluepeace

Oil drilling and sea-based tourism “cannot coexist”, says Executive Director of local NGO Bluepeace Ali Rilwan, who has suggested that drilling for oil will create a number of problems.

Rilwan’s comments follow further confirmation this week from President Abdulla Yameen that that the government will commence work on locating crude oil in the Maldives.

According to local news outlet CNM, Yameen said that if the government is indeed successful in finding oil in the Maldives, the outlook for the entire country would change for the better.

These statements were made at a land reclamation ceremony held on Sunday (March 16) on the island of Meedhoo in Dhaalu atoll. Speaking at the launch, President Yameen suggested that the Maldives could be developed using available resources.

When asked which would be more beneficial to the Maldives, Rilwan said “it’s a choice of the government.”  He noted that with the large income from tourism and the spread of guest houses in local isands, the oil drilling “won’t have benefits for the people as a whole.”

“We can’t afford to go into that dirty energy,” he concluded. “When you take up the issues of drilling, we are concerned about the oil container tanks with unrefined fuel passing through.”

With this in mind,  Rilwan asked, “can we avoid a distaster in the Maldives? The Maldives is a tiny island and this can have a very negative impact, the tanks are a worrying thing.”

Famed for its luxury resorts, the Maldives has relied on tourism for an estimated 70 – 80% of its GDP. Plans to look for oil in the past had aimed to diversify the nation’s economy.

There are currently no confirmed plans for the location of the drilling, should it take place – an uncertainty which has made it difficult for environmentalists to comment on the matter.

Rilwan noted that the fact that it is not known whether drilling will be coastal or off-shore makes it difficult to predict environmental issues.

The renewed interest in the search for oil was prompted by the results of seismic reports conducted in 1991– the recent findings of which have caused authorities to seek foreign assistance.

The Maldives National Oil Company (MNOC) was founded in 2003 to take direct responsibility for the development of oil and gas industry in the Maldives.

“The fact that two leading oil exploration companies in the world had invested in exploration drilling in the Maldives, keeps up the glimmer of hope for commercial success of oil and gas exploration in the Maldives,” the MNOC has said previously.

“Today, with the remarkable improvement of technology in the area of oil and exploration such as three or four dimensional seismic survey systems etc., the Maldives National Oil Company is hopeful that oil or gas can be discovered in Maldives.”

Managing director of the MNOC Ahmed Muneez told local media last month that the government intended to start work on new exploration within a few months.

“We have contacted a Norwegian company and a German company to help us better understand the findings of the study. Based on this report, we’re hopeful of advertising the Maldives as a new destination of oil exploration,” Haveeru quoted Muneez as saying.

He explained that an outside company would be hired to conduct a global advertising campaign in order to market the country as an oil source.

Under the presidency of Mohamed Nasheed, the Maldives – famously vulnerable to the effects of climate change – had pledged to become carbon neutral by 2020.

Nasheed stated that the Maldives was a key model for other countries seeking to become more sustainable, and that an inability to meet the unilateral commitments would prove detrimental to wider arguments around the globe for adopting law carbon initiatives.

The government of Nasheed’s successor Dr Mohamed Waheed also said that it was committed to “not completely” reversing the Nasheed administration’s zero carbon strategy: “What we are aiming to do is to elaborate more on individual sustainable issues and subject them to national debate,” said Waheed.

Speaking to Minivan in October 2012, the government assured that they were adhering to their commitment to become carbon neutral by 2020 in spite of political uncertainty.

“We are continuing with the carbon neutrality program,” she said. “We are giving it our best shot,” said then Environment Minister Dr Mariyam Shakeela.

Minivan News was unable to obtain comments from the Ministry of Environment and Energy at the time of press.

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Week in review: February 22– 28

A tragic incident at the country’s main public hospital – IGMH – caused outrage this week as it was revealed that HIV infected blood had been given to a patient.

Profuse apologies from the Home Minister were not enough for the opposition Maldivian Democratic Party (MDP) who accused the government of hiding the news for eight days in order to complete the celebrations of its first 100 days in power.

Earlier in the week, Minivan News was informed that certain operations at the hospital had been suspended owing to the lack of the necessary staff safety equipment. The week had begun with Indian Foreign Minister Salman Khurshid pledging US$10 million for the renovation of the Indian-built facility.

The introduction of unlimited health insurance had already been announced earlier in the week. The ambitious pledge is soon to be followed by larger pensions, both of which are set to be sustained through the issuance of government debt.

Promises for completion of the long-awaited Malé-Hulhulé bridge within two years were also given, though development of the central atolls appeared to be coming at the expense of the Addu – the country’s second-city.

High priority is being given to the housing situation of police officers, while the fisheries minister launched a training scheme for long-line fishing, arguing that deviation from the country’s traditional pole-and-line approach was important to utilise all fishing grounds.

The Supreme Court’s decision to prosecute the Elections Commission (EC) on contempt of court charges prompted alarm this week from both representatives of the EU and Maldivian civil society, who demanded the court “earn the respect of the people”.

The EU called upon the government to ensure the EC’s independence in the run up to the March 22 parliamentary elections. Despite the government’s financial restrictions on EC spending, the commission has assured that polls will be unaffected.

While on the campaign trail, the MDP’s Mohamed Nasheed warned that the people of the country would not tolerate further electoral interference, labelling the ongoing court case “unjust”.

While Nasheed assured that his party does not intend to obstruct the government should it win a majority, President Yameen remained unconvinced, assuring voters that the MDP would attempt to remove him.

Yameen also rounded on the current members of the country’s legislature, arguing that the public had lost confidence in the institution. The recently jailed MP Abdulla Jabir was this week cleared of further cannabis possession charges – his lawyers have suggested his earlier conviction violated his constitutional rights.

The Criminal Court’s running feud with the Prosecutor General’s Office continued this week, with the PG’s Office accusing the court of overstepping its authority when introducing new time limits for the forwarding of cases.

In the Civil Court, a dispute over an oil trade agreement between the State Trading Organisation and Villufushi constituency MP Riyaz Rasheed was thrown out after the former’s legal team failed to show up.

Further agreements on oil trade could be on their way, however, as the the national oil company announced it was searching for outside assistance for further exploration projects.

Though well-qualified to discuss oil, Saudi Prince Salman bin Abdulaziz was reported to be visiting the Maldives in order to talk about potential investments in tourism, transport, and Islamic affairs, as well the provision of a soft loans to the Maldives.

One avenue of Saudi investment into the country was confirmed this week, with a prominent investment firm from the kingdom making plans for a US$100 million resort in Laamu atoll.

Maldivians seeking to travel in the other way may have to delay their plans, however, after both the Civil Court and the Anti Corruption Commission ordered the Islamic Ministry to halt the awarding of contracts for Hajj trips pending investigations into the bidding process.

Elsewhere this week, the second case of forced child prostitution in the country’s southern atolls, while an inmate at Maafushi jail suffered severe head injuries during a fight with other inmates.

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Civil Court dismisses STO’s case against MP Riyaz Rasheed’s Meridian Services

The Civil Court has dismissed a case filed by the State Trading Organisation (STO) against MP Riyaz Rasheed’s Meridian Services seeking to recover MVR19.3 million (US$1.2 million) released as credit.

According to local media, the court dismissed the lawsuit after STO lawyers did not turn up to a hearing scheduled for February 6.

Judges are empowered to dismiss cases if the plaintiff or claimant does not attend court hearings.

The former Dhivehi Qaumee Party MP meanwhile joined the ruling Progressive Party of Maldives last month.

STO and Meridian Services signed an oil trade agreement on March 31, 2010, which offered the company a credit facility worth MVR20 million (US$ 1,297,016.86) for purchasing oil from STO.

The agreement stipulated that payments had to be made within a period of 40 days.

However, in August 2010, STO lowered its credit limit from MVR20 million to MVR10 million (US$648,508.43) and shortened the payment period from 40 to 30 days, prompting Meridian Services to sue STO for alleged breach of contract.

Meridian Services lost the first case, however, after Civil Court Judge Abdulla Jameel Moosa ruled in favor of STO.

Case history

In April 2012, the STO sent a letter to the Civil Court requesting withdrawal of the case against Meridian. However, then-STO MD Shahid Ali claimed a week later that the letter was sent “by mistake.”

The STO’s intent was to request delaying hearings as the company did not have the legally required number of members on its board of directors following the “change in government” on February 7, 2012, Shahid explained, adding that the case would resubmitted.

At a hearing of the case in June last year after the trial resumed, STO lawyers claimed that original documents of business transactions with Meridian had been stolen.

The theft of the documents from the STO office occurred on October 27, 2011 and was reported to police at the time, the lawyers said.

The lawyer reportedly requested the opportunity to present witnesses to prove the authenticity of copies or other records of the stolen documents.

However, lawyers for the Vilufushi MP’s Meridian Services disputed the authenticity of the purchase orders, delivery notices, and invoices submitted as evidence by STO, claiming the documents were forged.

The Meridian lawyer claimed that there were discrepancies in the purchase orders and delivery notes with inconsistent numbers and quantities as well as lack of signatures.

In response, the STO lawyer said Meridian had not submitted any evidence or any statement challenging the validity of the evidence submitted by STO.

The judge adjourned the hearing after announcing that a decision would be made at the next hearing over STO’s request to present witnesses.

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State Trading Organisation bankrupt: President Yameen

The State Trading Organisation (STO) is bankrupt, President Abdulla Yameen revealed at a rally in Hulhumale on Friday night, according to local media reports.

The state-owned STO is the country’s primary wholesaler, responsible for bringing in the vast majority of basic foodstuffs such as rice and flour, as well as other imported commodities such as electrical goods.

It also imports the vast majority of the Maldives’ oil, used to fuel fishing and transport vessels, diesel generators, air-conditioners and water desalination plants.

The STO sparked fears of an impending oil shortage crisis in early November, after then Managing Director Shahid Ali warned the company would run out of oil as early as November 10 if it did not pay some of its US$20 million debt to suppliers.

Shahid told an emergency meeting of parliament that government-owned companies had failed to pay the STO the almost US$40 million it was owed, and appealed to the central bank to use the foreign currency reserves to bail it out of its debt.

Central bank governor Fazeel Najeeb meanwhile warned that currency reserves were dwindling, and the state was on the verge of having to print money.

Speaking during Friday’s rally, President Yameen said “not only does STO not have dollars, it does not have Maldivian Rufiyaa either. Funding the oil import through STO is now a burden for the state.”

“I checked today where STO is now. By the time I left STO, the company had developed many commercial projects and STO was making MVR 154 million in profit. Today, STO is bankrupt. I am telling you, it is bankrupt. STO does not have money,” said Yameen, who chaired the organisation during the rule of his half-brother, Maumoon Abdul Gayoom.

Impact

The tourism industry is generally insulated from Maldives’ financial woes by virtue of operating a separate dollar economy – a practice technically illegal under the country’s monetary regulations, but which reduces the industry’s exposure to the rufiya as well as rendering it unexchangable and creating a foreign currency shortage for local people.

However the tourism industry – indirectly responsible for up to 70 percent of the country’s GDP and up to 90 percent of its foreign exchange – is unable to import oil and other commodities independently and therefore is exposed to any supply shortages experienced by local suppliers of commodities such as oil.

In June 2013 resort operators and businesses across the country were forced to dramatically alter menus and even temporarily close entire restaurants after weeks of disruptions to the supply of Liquefied Petroleum Gas (LPG).

The general manager of one property told Minivan News at the time that the LPG shortage had created a “food and beverage nightmare” that lasted three weeks, while some restaurants in Male were forced to temporarily close.

One of President Yameen’s early acts in office was to replace Shahid Ali as head of the STO with Adam Azim, brother of Defence Minister Mohamed Nazim.

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President Yameen urges ACC to investigate alleged Burma oil fraud: “We won’t try to cover up anything”

President Abdulla Yameen has asked the Anti-Corruption Commission (ACC) to investigate the alleged US$800 million oil fraud conducted by the State Trading Organisation (STO) during his chairmanship.

Speaking at a celebratory function held by the Progressive Party of the Maldives (PPM) on Wednesday night, local media reported Yameen as stating “Why not investigate the case? I want the allegations against me investigated while I’m president. We won’t try to cover up anything.”

The allegations first surfaced in an Indian magazine article, which alleged Yameen was “the kingpin” of a scheme to buy subsidised oil through the State Trading Organisation’s branch in Singapore and sell it on at a premium through an entity called ‘Mocom Trading’ to the Burmese military junta.

The article drew on an investigation report by international accountancy firm Grant Thorton, commissioned by Nasheed’s government in March 2010 to investigate the oil sales after it obtained three hard drives full of financial information detailing transactions from 2002 to 2008. No digital data was available before 2002, and the paper trail was described as hazy”.

Yameen has previously acknowledged the trade but has disputed its illegality, describing the allegations as attempts at “political blackmail.”

“Myanmar, Vietnam, the STO is an entrepreneurial trade organisation. It trades [commodities like] oil, cement, sugar, rice to places in need. It’s perfectly legitimate. I was a perfectly clean minister while in Gayoom’s cabinet. They have nothing on me,” he told Minivan News following the publication of the Indian article.

“The truth is, towards the end of Nasheed’s government, the company that investigated the case had filed it to Singapore Appeal Court,” he told the PPM gathering last night.

“The case had been withdrawn from the court during Nasheed’s presidency, as requested by Nasheed, because there was nothing more to be investigated, no way forward. But until now, the government has not received any document that belongs to the company, that carries the company’s stamp. I went to Singapore twice and met with the lawyers,” the new president said.

Government pays penalty fees to halt investigation

In September this year the Finance Ministry confirmed the government had paid millions of dollars in contractual penalty fees to Grant Thornton, after last year terminating its contract to recover assets allegedly stolen during the 30 year regime of Yameen’s half-brother, former President Maumoon Abdul Gayoom.

Under the terms of the contract, signed by the former Nasheed administration in July 2010, Grant Thornton would charge no fee for the investigation beyond costs such as flights and accommodation, instead taking a percentage of the assets recovered.

At the same time, Grant Thornton was entitled to charge a penalty fee of up to US$10 million should the government terminate the investigation, such as in the event it arrived at a political deal.

One of the first acts of President Dr Mohamed Waheed’s government after 7 February 2012’s controversial transfer of power was to dissolve the Presidential Commission which had been overseeing Grant Thornton’s investigation, and terminate the agreement with the forensic accountants.

In August 2012, Attorney General Azima Shakoor issued a statement announcing that her office had received two invoices totalling US$358,000 and GBP£4.6 million from Grant Thorton, charges she claimed were for legal advice provided to Nasheed’s government.

The government paid an initial GBP£1.5 million (US$2.4 million) on 24 April 2013, with the remaining amounts to be paid in monthly installments of GBP£300,000 (US$476,000) each on May 22, June 27 and July 17.

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State Trading Organisation stops rationing of oil supplies

The State Trading Organisation (STO) has ceased to ration oil supplies, following the arrival of a delayed shipment from Dubai last week, reports local media.

After the oil shipment arrived Thursday (August 15), STO resumed selling oil without any restrictions, STO Managing Director Shahid Ali told local media yesterday (August 18).

“The shipment was delayed because the vessel could not approach the loading bars. Since they are charter boats, even a delay of one day would cause problems,” said Ali.

He explained that delays in oil shipment arrivals requiring oil supplies to be controlled is not a new problem and STO has had to ration oil on several past occasions.

“In spite of the control, we supplied oil to STELCO and other important customers without any restrictions, but supply to other groups was somewhat controlled,” Ali noted.

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Diesel fuel rationed after STO shipment delayed

The State Trading Organisation (STO) has controlled the sale of diesel fuel in the Maldives due to a shipment delay.

The delay of diesel shipments occurs “sometimes during the year” when ships carrying diesel from Dubai are “held up” in port, STO Managing Director Shahid Ali told local media.

While diesel will be made available to the State Electric Company (STELCO), resorts and general customers, new orders for diesel are being controlled by STO, according to Ali.

“This is a common problem. But there is enough oil in stock for STELCO and all the resorts, who buy oil on a regular basis. It is only the sale of oil to other groups that has been controlled,” said Ali.

“We might not be able to meet the demand of a sudden order. But regular customers will have continued supply,” he added.

The diesel shipment will arrive on Wednesday (August 14) and STO expects the control of diesel to be lifted by Thursday, according to Ali. No restrictions on petrol supplies have been enacted.

Meanwhile, Fuel Supply Maldives has also restricted the sale of diesel, following STO’s control of diesel supplies, Managing Director of Fuel Supply Maldives Adam Saleem told local media.

“We have rationed the sale of diesel to resorts. We have faced this problem before as well, but this time the delay has been prolonged,” said Saleem.

Fisherman are also facing problems due to the limited diesel sales, while resorts are complaining about running out of diesel supplies, according to local media.

Diesel fuel is the primary source of power generation in the Maldives, with most islands having separate power house facilities. Marine diesel is also used to fuel the country’s fishing and transport fleet, accounting for roughly 80 percent of the country’s consumption.

The near total dependence saw the Maldives ranked dead last in report published by the UNDP in 2007 on the vulnerability of developing countries to fluctuating oil prices, a fair stretch behind Vanuatu, effectively placing the country among the world’s most oil-addicted nations.

“Island countries in general are extremely vulnerable to increased oil prices. They comprise distant and small markets and have to bear the burden of higher shipping costs, while electrical power generation is largely fueled by diesel,” the report noted.

The Maldives dependency on oil was discussed in October 2012 by President Mohamed Waheed at the World Energy Forum in Dubai.

“A development path primarily based on expensive diesel generated electricity is unsustainable in any country, let alone a small country like Maldives,” said Waheed at the forum’s opening ceremony.

“Today, we spend the equivalent of 20 percent of our GDP on diesel for electricity and transportation. We have already reached the point where the current expenditure on oil has become an obstacle to economic growth and development,” he continued.

Waheed explained that the current price of 35-70 US cents per KW hour meant that the government was being forced to provide “heavy subsidies” to consumers, giving little option but to move towards a low carbon alternative.

State Trading Organisation (STO) Managing Director Shahid Ali was not responding to calls at time of press.

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Original documents of transactions with Meridian Services stolen: STO lawyer

Lawyers for the government-owned State Trading Organisation (STO) claimed in the Civil Court today that original documents of business transactions with Dhivehi Qaumee Party (MP) Riyaz Rasheed’s Meridian Services had been stolen, reports Haveeru.

At today’s hearing of STO’s lawsuit against Meridian seeking to recover MVR 19.3 million (US$1.2 million) released as credit, the company’s lawyers said the theft of the documents from the STO office occurred on October 27, 2011 and were reported to police at the time.

The lawyer reportedly requested the opportunity to present witnesses to prove the authenticity of copies or other records of the stolen documents.

However, lawyers for the Vilufushi MP’s Meridian Services disputed the authenticity of the purchase orders, delivery notices and invoices submitted as evidence by STO, claiming the documents were forged.

The Meridian lawyer claimed that there were discrepancies in the purchase orders and delivery notes with inconsistent numbers and quantities as well as lack of signatures.

In response, the STO lawyer said Meridian had not submitted any evidence or a statement challenging the validity of the evidence submitted by STO.

The judge adjourned the hearing after announcing that a decision would be made at the next hearing over STO’s request to present witnesses.

On April 26, 2012, the STO issued a press statement announcing that it would file a case at Civil Court to recover MVR 19,333,671.20 (US$1,253,804.88) allegedly unpaid by Meridian Services.

STO and Meridian Services signed an oil trade agreement on March 31, 2010, which offered the company a credit facility worth MVR 20 million (US$ 1,297,016.86) for purchasing oil from STO, stipulating that payments had to be made within a period of 40 days.

However, in August 2010, STO lowered its credit limit from MVR 20 million to MVR 10 million (US$648,508.43) and shortened the payment period from 40 to 30 days, prompting Meridian Services to sue STO for alleged breach of contract.

Meridian Services however lost the first case after Civil Court Judge Abdulla Jameel Moosa ruled in favor of STO.

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Committee to enlist Singapore parliament in US$800 million oil trade probe

Parliament’s Committee on National Security is requesting assistance from the parliament of Singapore to investigate the case related to US$800 million in “illegal” oil trade allegedly conducted by former President Maumoon Abdul Gayoom and his half-brother, the Progressive Party of the Maldives (PPM) presidential prospect, MP AbdullaYameen, Sun Online reports.

During the committee meeting Monday (January 21) MP Reeko Moosa Manik announced the parliament was notified to contact Singapore’s parliament requesting they facilitate meetings with the Singapore police and anti-corruption authority.

The Foreign Ministry refused to fully cooperate and said it would take two weeks to arrange the requested meetings, according to local media.

Travel to Singapore and Malaysia for the investigation was scheduled for January 20, however was delayed due to the “failure to arrange meetings with [the necessary] investigative bodies,” added Sun Online.

The alleged international money laundering racket involved Yameen as “the kingpin” of a scheme to buy subsidised oil through the State Trading Organisation’s branch in Singapore and sell it on through an entity called ‘Mocom Trading’ to the Burmese military junta, at a black market premium.

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