The ministry of finance has sold 20 percent of the Maldives Water and Sanitation Company (MWSC) to Japanese company Hitachi Plant Technology.
The deal was signed by Minister of Finance Ali Hashim and President of the Hitachi Company Masaharu Suvikawa in Male’ yesterday.
According to Fathmath Muaza, assistant director of the ministry of finance, the total sale was worth US$16 million, with 53400 shares sold at US$ 305.90 per share – the same price the government last bought them for.
Asked why the government has decided to sell part of a profitable business, Muaza said “At the end of 2008, the government had to buy back the shares it had with the Danish company [HOH Water Technology of Denmark] as per the [existing] joint venture agreement. All these years that company in Denmark held 24 per cent of the shares in MWSC.”
Mifzal Ahmed, investment advisor to the ministry of economic development, said Hitachi’s decision to purchase shares in MWSC shows that the foreign investment community regards the Maldives “as a very sound place to do business.”
” It also shows that large companies are interested in engaging with local companies to introduce new technologies, particularly environmentally friendly technologies, that will make a strong contribution to our goal of carbon neutrality by 2020,” Mifzal said.
“We are also confident that these technologies will result in a better quality of service to the people of the country at the most affordable price possible.”
The government has previously come under fire for its privatisation plans.
In 2009, it was accused by the opposition DRP of using funds to the tune of US$20 million, allocated for tsunami relief on Meemu Kolhufushi and Thaa Madifushi, for purchasing the MWSC shares back from the Danish company.
DRP spokesman Ibrahim Shareef said “I don’t think this is a good idea at all, this money should have been used for the tsunami relief effort. Under the joint venture agreement, there is a buy back option for the Danish company, we didn’t have to buy back all the shares.”
Shareef said he thought the biggest problem with the deal was that all the shares were sold at the same price that the government bought them for.
“If they sold it at a premium it might have been a different story, and there wasn’t even an initial public offering.”
Dr Mohamed Jameel Ahmed of the Dhivehi Qaumee Party, DQP, said he felt the deal was not transparent enough, had no regards for the impending privatisation bill, and questioned why the company was not open for public purchase.
“I don’t see the necessity of selling 20 per cent of a profitable company for US$16 million.”
Jameel said the deal seemed rushed and due to the lack of transparency, said he held a “strong suspicion [that there were] underhand deals”.
In addition, he said, “why was the deal rushed in a recessionary period as we would have got a better price if we had waited a few months?”
In response to these accusations, Mohamed Zuhair, the president’s press secretary, said “DQP is obviously an opposition party and they would refute governtment policy. We deny all allegations that the process is not transparent.”
Zuhair siad that the whole process was monitored through the privatisation committee, public private partnership, Invest Maldives and the ministry of finance.
Previously, the government sold seven percent of its shares in Dhiraagu to Cable and Wireess for US$ 40 million, a deal which was heavily criticised as many felt the deal was largely under valued.