Tag: STO

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.

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STO, STELCO and Dhiraagu boards reconstituted by president

President Mohamed Waheed Hassan has reconstituted the Boards of Directors for the State Trading Organisation (STO), the State Electric Company (STELCO) and telecommunications group Dhivehi Raajjeyge Gulhun (Dhiraagu).

Abdulla Faiz is set to take the Chairperson role for the STO board. Ahmed Shareef and Ibrahim Athif Shakoor will take the Chairman role on the Board of Directors at STELCO and Dhiraagu respectively, according to the President’s Office webste.

The announcement was made after President Waheed earlier this month announced he was reconstituting the boards of six other companies.

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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.

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Diabetics panic as Male’s insulin supply dries up

Diabetic patients taking regular ‘Human Mixtard’ insulin injections have been on a panicked hunt around the pharmacies for almost a week, due to the sudden shortage in supply, Minivan News has learned.

Human Mixtard is the most commonly prescribed insulin to diabetic patients, which number approximately 16,000 nation-wide.

Dr Ahmed Razee, an internist with special interest in diabetes and kidney diseases, told Minivan News that many patients are complaining that they have been unable to get the insulin from pharmacies.

“I’m prescribing insulin for roughly 20 patients. I’m just one physician. There are an estimated 16,000 diabetics, and about two percent of them require insulin,” he said.

According to the State Trading Organisation (STO), which is the major drugs importer and supplier, the drug supply is dry because of a “registration problem” with Maldives Food and Drug Authority (MFDA), which approves and monitors the medical drugs supply.

“There is a registration problem with the drug. We are discussing with the authority to resolve the issue,” STO Managing Director Shahid Ali told Minivan News on Sunday.

Shahid explained that all drugs have to be registered and approved by the MFDA before being released on the market. He added that an existing Mixtard stock is being held in reserve, and will be released to the pharmacies as soon as the registration problem is cleared.

MFDA was not responding at the time of press.

Minivan News could not get an official comment from the second largest drug importer, ADK Pharmacy, as well.

Posing as a customer, Minivan News called the main ADK pharmacy and was told that “insulin stock is out in all ADK pharmacies” and that “new stock will arrive next week”.

CEO of the Diabetic Society of Maldives (DSM) NGO, Aishath Shiruhana, said she was unaware of the shortage but that two people had called her requesting insulin.

Shiruhana said news of the Human Mixard shortage was upsetting as it was needed for the survival of diabetic patients.

However, she said DSM has an insulin stock and will continue to provide free injections to children registered at the NGO.

Meanwhile, a proposal to allow doctors to provide medication directly from health centres, bypassing the prescription process, is currently under review.

State Health Minister Ibrahim Waheed announced last week that the proposal is being discussed with health corporations and those prescriptions could be ruled out by next June at the earliest.

He further suggested that a large pharmacy would be established in every atoll hospital, and would supply products to other health centers across the atolls.

Generic drug-based systems which include hospital-centred distribution are common practice in other countries, sources say.

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STO expresses interest in holding events at Equatorial Convention Centre

The State Trading Organisation (STO) has expressed interest in holdings its events at the newly-built Equatorial Convention Centre (ECC) in Hithadhoo, according to newspaper Haveeru.

STO Managing Director Shahid Ali said the ECC could be used for several events and functions.

“We intend to hold our next Dealers Meeting and the Makita Fair at the convention centre,” he said.

The EXX could be marketed in a similar manner to the Bandaranaike Memorial International Conference Hall (BMIHC) in the Sri Lanka, Shahid said.

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STO plans new storage facility in Haa Alif atoll

The National Planning Council has approved the State Trading Organisation (STO)’s plan to build an oil storage facility on an unidentified island in the north’s Haa Alif atoll.

The facility would cover 600 square metres and contain over 200 tons of oil, reports Haveeru. It is said to be 10 times the size of a similar facility at Funadhoo.

STO’s Managing Director, Shahid Ali said studies show the project would benefit the Maldivian economy. He said it has already drawn the interest of foreign investors.

The project is awaiting approval from the Cabinet.

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Commodity prices vary “significantly” between retailers, reports Economic Development Ministry

The Department of National Planning and the State Trading Organisation (STO) have conducted a price comparison exercise across Male’ in a bid to show that while some retailers are charging inflated prices for basic commodities, most prices have risen little.

Speaking yesterday evening from the President’s Office, Economic Development Minister Mahmood Razee said the statistics, which were compiled by the Department of National Planning in collaboration with his ministry, indicated that although certain prices had been found to have risen in the last few months, there was no pattern to link these costs solely to a controversial managed float of the local currency.

The opposition has maintained that demonstrations raging across Male’ this week were against the government’s decision to implement a managed float of the rufiya and are led by youth unhappy with rising commodity prices.  These claims were made despite the active involvement of dismissed opposition Deputy Leader Umar Naseer, and MPs Ilham Ahmed, Ahmed Mahlouf, Ali Waheed, and Ahmed Nihan.

However, Razee added that discussions were ongoing with the STO – a main buyer of goods to the country – to try and maintain import supplies of 27 key food items in attempts to try and keep prices stable as well as enacting a cabinet pledge to cut import duty on diesel fuel by 50 percent.

Speaking ahead of a fourth night of protests by young people, parliamentarians and political activists on the streets of Male’, Dhivehi Rayyithunge Party (DRP) MP Ahmed Mahlouf said that although he had not been made aware of the content of the statistics at the time, he believed that protestors would not believe or be satisfied by the government’s claims and reaction.

“At this time, I think it would be difficult to accept that this is a genuine or positive message. At this point I don’t think [this] one press conference will help people,” he said.

Mahlouf added that he believed comments made by President Nasheed earlier this week, where he allegedly denied knowledge of the street protests concerning increased living costs that have garnered news coverage all over the world, had been extremely offensive to people gathering on the streets .

“It would be better to have a statement from President Nasheed apologising for the stupid comments he has made,” he added. “These comments have only made protestors more angry.”

Government findings, which were compiled on April 2 by officers visiting ten different stores across Male’, were said to highlight prices found to vary, sometimes significantly, between the retailers.

Speaking at press conference last night alongside Finance Minister Ahmed Inaz and representatives from the Maldives Monetary Authority (MMA), Razee said that when talking about changes in prices, it was important to try and determine how extensive they were.

“Yes, there are changes in prices, however, we should also see that in terms of essential commodities, what are the different brands that are there [in stores] and the price variations between them?” he said.

Following price comparisons conducted on May 2 at 10 different stores in Male’, Razee took the example of the prices of five powdered milk products, where prices between the stores were said to vary between Rf150 and Rf345. In addition he also pointed to the price differences in diapers, which he claimed varied between Rf118 and Rf150 for the same product.

The figures presently supplied by the government to Minivan News did not appear to verify these price fluctuations.

Razee added that he was unable to speculate on how long some of these potential differences in prices may have been present in stores across the capital or when and for what purpose they may have been implemented.

“What we are saying it, if you look at the price fluctuations that were there in 2006, 2007 and 2008, and if you look at the price fluctuations of the last few years, you will see there is no clear cut format or reason to believe this is directly related to the float of the currency,” he said. “Yes, it would have a bearing, but what needs to [be understood] is that there may changes to the prices. However, these are varied.”

Razee claimed that the government was not using this explanation as an excuse to avoid acting on public price concerns and said that measures were being taken to try and offer stable prices for certain “essential products”.

“We are in consultation with the STO and we have identified together 27 elementary items, out of which six are currently imported directly. [STO] is going to import the other items [on this list] as well to try and maintain price stability and ensure the availability is there,” he said. “In addition to this, the cabinet today advised the president to remove 50 percent of the duty on diesel. So this will give some relief to power generation, electricity bills and transportation costs.”

Finance Minister Inaz added that the government had decided to release some of its statistics to try and highlight current prices being paid by goods in relation to the last few years.

“It is very easy in a small economy to play with and manipulate the confidence of the economy,” he said. “Confidence is the most important factor to build an economy and it can be easily twisted. We agree the prices have gone up, but we want to maintain these price levels at a competitive level compared to other international rises.”

Cost statistics

The government, in figures compiled by Department of National Planning, outlined a number of changes in the average prices paid for goods between March 2010 and March 2011.

These price changes include:

• One kilogram of loose rice – up 1.07 percent from last year

• One kilogram of ordinary flour – down 1.89 percent from last year

• One kilogram of frozen chicken – up by 8.73 percent from last year

• One medium sized coconut – up 69.71 percent over last year

• One hundred grams of garlic – up 22.34 percent last year

• One kilogram of potatoes – up 8.74 percent last year

• One kilogram of imported onions – down 12.64 percent from last year

• One kilogram of yellow coloured dhal – up 17.63 percent from last year

• One 500 millilitre bottle of Kinley mineral water – down 30.30 percent from last year

• One 185 gram can of Felivaru brand fish chunks in oil – up 22.24 percent from last year

• One unit of state-supplied electricity – unchanged from last year

• Thirteen kilogram of cooking gas – up 12.12 percent from last year

• One litre of petrol – up 32.65 percent over last year

• One packet of Fitti brand small baby diapers – up 4.35 percent from last year

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Ali Hashim to head Addu International Airport Company

Former Finance Minister Ali Hashim has been appointed Chairman of the Addu International Airport Company Ltd (AIACL), a new joint venture formed between the Gan Airport Company, State Trading Organisation (STO) and the Maldives Airports Company Ltd (MACL), reports Haveeru.

Apart from Hashim, who resigned in December last year after parliament rejected his reappointment by President Mohamed Nasheed, the AIACL’s board comprises of STO MD Shahid Ali, MACL CEO Mohamed Ibrahim and Gan Airport MD Mohamed Didi and the company’s board member Ahmed Naseer.

STO MD Shahid Ali told newspaper Haveeru in January that the highest priority for the new joint venture would be to expand the airport’s runway and improve its surface to allow international flights to land in the southernmost atoll.

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