STO to pay off debts in three years

Managing Director at the State Trading Organisation (STO) Adam Azim has said the state-owned company’s debts will be paid off within three years.

Azim told Haveeru that the STO’s US$144 million (MVR1.7 billion) debt was unprecedented, and that US$51 million had been paid off during his tenure as a result of reductions in expenditure.

Immediately upon assuming office last November President Abdulla Yameen – once head of the STO – declared the company bankrupt.

In January the company announced a campaign to cut operational costs by MVR50 million (US$3,242,542) in 2014 , before posting profits of MVR44 million (US$2.8 million) in May.

The 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.

Source: Haveeru


Court rules in favour of STO in Al Fresco cafe dispute

The Civil Court has ruled that the State Trading Organisation (STO) was within its rights to order the eviction of the Al Fresco cafe at the STO trade centre in Malé.

The Cloud Nine Catering and Cafes company – which operates Al Fresco – sued STO in January after the state-owned enterprise gave a 90-day notice to vacate the ground floor premises of the cafe.

In the judgment (Dhivehi) delivered on Thursday (October 2), the Civil Court ruled that the notice was given in accordance with the lease agreement.

The agreement contained a clause that authorises STO to terminate the lease with due notice, the judge noted.

Cloud Nine had argued that Al Fresco should be allowed to operate until the end of the lease period. The court granted a stay order in January halting the eviction pending a judgment.


State Trading Organisation aims to produce 1000 jobs in 3 years

The Managing Director of the State Trading Organization (STO) Adam Azim has said that the company will produce 1000 jobs within the next 3 years.

Adam Azim said that the company is looking to establish a capable work force across the Maldives, reported local media Sun Online.

“A thousand jobs will be produced with the health sector pharmacies and hypermarkets that we plan to establish,” he added.

The company has plans to invest in the development of its staff with training and education opportunities for the next four years, Azim told Sun.

“We will invest in education, regardless of the cost,” Azim said.

The state-owned STO is the country’s primary wholesaler, responsible for bringing in the vast majority of basic foodstuffs, as well as investing in oil and the tourism industry.

The company was announced bankrupt by President Yameen in November 2013, following which the companylaunched a campaign to cut operational costs by MVR50 million in 2014 (US$ 3,242,542).

More recently, in March 2014, the STO told local media that a five-star hotel it is building in Hulhumalé will be fully completed by January 2015.

STO has also announced on April 6 2014 that they will be placing three additional oil storage tanks in Kafu Fuadhoo, in a bid to increase the oil capacity.


Three additional oil tanks to be placed in Funadhoo

The State Trading Organisation (STO) has announced plans to place three additional oil storage tanks in Kaafu Funadhoo, just off the northern side of the capital Malé.

Managing Director of STO Adam Azim said that the Maldives’ oil storage capacity needs to be increased, according to local media Sun Online.

“We are planning to place three more tanks in Funadhoo. If the oil reserve continues to decline at the present rate, we might face difficulties later. We’re planning to prepare for that,” the news outlet reported.

He added that efforts will begin soon to facilitate bigger vessels to enter the harbour.

“Right now the harbour can take up to about 8,000 ton vessels. We want to increase it to about 15,000 or 16,000 ton vessels.”


STO’s Hulhumalé hotel to be completed in one year

The State Trading Organisation (STO) – Maldives’ primary wholesaler – has told local media that the five-star hotel it is developing in Hulhumalé will be fully completed in 12 months’ time.

Managing Director Ali Azim told Sun Online that he expected some rooms to be completed and available for use by January 2015.

The original contract for the development of the 250-room Radisson Blu Hotel was signed between the STO and the US Carlson Group.

Financial constraints delayed the start of the project until 2011, while the STO signed a US$32 million syndicated loan agreement in October 2012 to finance the development.

Full speed has been resumed on the construction after a further slowdown last year, Azim told Sun.

In 2012, then STO MD Shahid Ali told local media that the organisation needed at least “at least three resorts and one hotel” to meet its demand for foreign currency at a time the country was facing a ongoing dollar shortage.

“We are trying to a find a way to earn the foreign currency we need without relying on another party for it,” Shahid told Haveeru.

The Maldives grapples with a foreign currency deficit due to a heavy import-export imbalance. Goods from overseas must be purchased with foreign currency, but the Maldives has little ability to earn this outside the resort industry, which is thought to account for around 90 percent of the country’s foreign exchanges.

Since that time, new President Abdulla Yameen – who replaced Shahid soon after assuming office – has declared the STO bankrupt.

“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,” said Yameen last November.

The STO sparked fears of an impending oil shortage crisis in early November, after Shahid warned the company would run out of oil in a matter of days 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.

After his appointment as MD, Ali Azim announced plans to cut operational costs by MVR 50 million in 2014 (US$ 3,242,542).


Addu airport development awarded to UK-based company

UK-based Lagan Construction has been chosen to develop Addu International Airport, State Trading Organisation (STO) has announced.

Managing Director of STO Shahid Ali told local media that along with Lagan Construction, Danish company MT Hojgaard had also submitted a bid for the project.

“The tender for the development of Gan Airport was opened in December. It took is one month to evaluate the bids. Two parties had submitted proposals.

“They were Lagan Construction and Højgaard. Out of them, Lagan had submitted the most responsive bid in the bid evaluation process. So Lagan has been shortlisted,” Shahid was quoted as saying in local media.

Shahid stated that discussions were underway with Lagan to implement the project.


STO to purchase three resort islands to generate dollars

State Trading Organisation (STO) has announced it will venture into the Maldives tourism industry in order to increase its access to foreign currency.

The STO is the Maldives’ state-owned importer, and is the primary supplier of general goods, fuel and pharmaceuticals to the Maldives. It also supplies aviation fuel to Ibrahim Nasir International Airport (INIA).

STO Managing Director Shahid Ali said the company needed to purchase “at least three resorts and one hotel”, to meet its demand for foreign currency at a time the country was facing a ongoing dollar shortage, according to newspaper Haveeru.

The Maldives grapples with a foreign currency deficit due to a heavy import-export imbalance. Goods from overseas must be purchased with foreign currency, but the Maldives has little ability to earn this outside the resort industry.

The industry typically pays salaries in local currency, while most of the its banking is conducted outside the country in financial hubs such as Singapore. The properties also charge directly in US dollars bypassing the rufiya altogether, a practice which is technically against the country’s monetary legislation but is unenforced by the central bank. As a result, the wider Maldives economy sees little of the dollars that tourists bring into the country, and importers must rely on the fluctuating blackmarket for rufiya-dollar transactions.

“We are trying to a find a way to earn the foreign currency we need without relying on another party for it,” Shahid Ali told Haveeru. “Venturing into the tourism industry is the way to achieve that. We need to own at least three resorts for this,” he said.

The STO board is currently reviewing resort islands for purchase, and a decision is yet to be made on which islands will be bought.

STO Spokesperson Ismail Sadiq had not returned calls at time of press.

The company is currently building a 5-star hotel on  Hulhumale under a contract with USA-based multinational travel company, Carlson Group. The hotel project started in October 2011, although the contract was signed between STO and Carlson in 2008. Shahid said at the time that the delay was due to financial constraints.

The STO was initially formed in 1946 as a fully state-funded business, in the name of Athireemaafannu Trading Agency (ATA), with the task of purchasing and importing essential food items in bulk to be distributed nationally via local traders and their own retail outlets. It was later expanded and rebranded as the State Trading Organisation.

The STO is not the first government entity to venture into the tourism industry. In February 2010 the Maldives Tourism Development Corporation (MTDC) – another public company investing in the tourism industry – paid US$3.5 million to end a long-running court dispute with former management of Herathera, Yacht Tours, after the company stopped paying rent and claimed the MTDC had failed to fulfil a contractual obligation to build a channel between the resort and the adjoining island of Hulhudhoo.

MTDC agreed to pay Yacht Tours the money to end the dispute due to spiraling costs: at one stage, 600 staff had been employed to look after 28 guests.


STO reports annual profit of US$9.5 million

The State Trading Organisation (STO) has announced an annual profit of Rf146.6 million (US$9.5 million) for 2011, a 23 percent increase from the previous year.

Sun Online reports that 2011 was the most profitable year in the public company’s history.

According to the director’s report approved at STO’s annual general meeting (AGM) on June 14, the rise in profits came from supplying jet fuel to the Ibrahim Nasir International Airport and importing medical consumables to the Male’ Health Services Corporation. STO also won bids to build roads in Addu City and develop the airport in Fuvahmulah.

A decision was made at Thursday’s AGM to distribute Rf72 per share as dividends. The decision was approved by over 80 percent of those voting.

Mohamed Farshath, H. Two Hearts, was voted to the board of director’s to represent public shareholders.

Following changes approved at last year’s AGM, the government’s stake of 92.29 percent was lowered to 81.6 percent. Shares owned by the public was raised from 7.71 to 18.4 percent.


STO withdraws US$1.2 million case against DQP MP Riyaz Rasheed’s Meridian Services

The government-owned State Trading Organisation (STO) yesterday withdrew a case worth more than a million US dollars lodged against Dhivehi Qaumee Party (DQP) MP Riyaz Rasheed’s Meridian Services Private limited.

The case concerned an unpaid sum of money worth Rf 19,333,671.20 (US$1,253,804.88), regarding Meridian’s use of the STO’s credit facilities.

Civil Court Judge Abdulla Jameel Moosa ruled that the case was dismissed, in response to a letter sent by the STO requesting the case be withdrawn.

Judge Moosa in his verdict stated that the court had received a letter from the STO requesting the court withdraw the case.

The letter noted that there were decisions to be made by the STO’s board of directors, and that after the “change in government”, the board did not have a sufficient number of members left to meet quorum and hold a board meeting. Therefore, the board was unable to make the required decisions, the organisation stated.

The sum of money the STO sought from Meridian Services included a sum of Rf 18,949,473.20 (US$ 1,228,889.31) for the use of STO credit facilities in payment for fuel oil, and a sum of Rf 384,198 (US$ 24,915.56) as a fine for the failure to make the payments on the date agreed in the contract made between the companies.

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

However, in August 2010, STO lowered its credit limit from Rf20 million to Rf10 million (US$648,508.43) and shortened the payment period from 40 to 30 days.

Meridian Services sued the STO for breach of contract claiming that STO had brought in the changes to the credit facilities without giving the required notice of one month, in the event that the STO decided to change the credit facility with regard to a policy change.

However, Meridian Services lost the case after Civil Court Judge Abdulla Jameel Moosa ruled in favor of STO, stating that the STO had not breached the contractual terms agreed between the parties and that the documents the STO had submitted to the court was evident that it had brought the changes in proper compliance with the agreement.

Speaking to Minivan News, former legal director of President’s Office and lawyer Hisaan Hussain questioned whether such a big case could be withdrawn without even a board resolution.

“We are not speaking of an ordinary company. This is a public company and its making such a decision without a board resolution is a huge concern,” she said.

“STO has public share holders; they have to be answerable to the share holders,” she said.

The STO is a major supplier of general goods and pharmaceuticals to the Maldives, as well as fuel. It also supplies aviation fuel to Ibrahim Nasir International Airport (INIA).

“Political Motive”

MP Riyaz Rasheed was a very vocal critic of Nasheed during his tenure as president. He at the time alleged that Nasheed’s government had attempted to ruin his business, and when the STO had initially reduced the credit facilities in August 2010, his business suffered significant losses and forced him to fire several employees.

Riyaz was not responding to calls at time of press.

With regard to the case, Maldivian Democratic Party (MDP) Spokesperson MP Imthiyaz Fahmy alleged that the decision to drop the case was politically motivated and that the STO’s making such a decision without a board resolution was part of an ongoing campaign to “cleanse” political figures affiliated to the current “coup regime”.

“They are now cleansing all the corrupt politicians who were involved in bringing about the coup on February 7. They started doing this from day one. At first it was MP Ahmed Nazim [Deputy Speaker of Parliament], then MP Ahmed ‘Redwave’ Saleem and now it is MP Riyaz,” Fahmy said.

In late February the Criminal Court dismissed four cases of fraud against Nazim – an MP of the People’s Alliance formerly headed by Gayoom’s half brother, Abdulla Yameen – stating that his “acts were not enough to criminalise him”.

All four cases against Nazim concerned public procurement tenders of the former Atolls Ministry secured through fraudulent documents and paper companies, and included setting up several paper companies to win a bid worth US$110,000 to provide 15,000 national flags for the atolls ministry in 2003, and a similar tender worth US$92,412 to provide 15,000 national flags in 2005. A third count – conspiracy to defraud the ministry in 2003 in a similar manner to win a public tender for procuring US$115,758 worth of mosque sound systems – was also dismissed.

On February 28 the Criminal Court ruled that MP ‘Red Wave’ Ahmed Saleem – a member of Gayoom’s Progressive Party of the Maldives (PPM) – was not guilty in a corruption case filed by the state, accusing him of paying Neyza Enterprises Private Limited 50 percent of the money given to the former atolls ministry to buy sound systems for mosques in the islands.

Nasheed’s Maldivian Democratic Party (MDP) has alleged that key parts of the judiciary were in the hands of the supporters of former President Gayoom, “and now we are seeing the truth of that claim,” said the party’s spokesperson Hamid Abdul Ghafoor, following Saleem’s case.

“Dr Waheed’s regime is using the courts to settle old scores, to reduce MDP’s parliamentary majority and to wipe the slate clean for government supporters,” he claimed.

Fahmy today alleged that the courts were now “turning down cases against these people, even when the cases have been submitted by an independent auditor general.

“This is clear infringement of free and fair justice system. Now Riyaz is released from owing millions of rufiyaa to a public company, with public shareholders,” Fahmy said.