The government has decided to terminate the agreement made with India–based Tatva Global Renewable Energy to provide waste management services in the capital Malé and nearby areas.
A company source said that the cabinet’s Economic Council informed them last month, citing unfavorable relations with the city council and the government’s preference for a state-owned service.
Speaking to Haveeru today, Economic Council Co-Chair and Tourism Minister Ahmed Adeeb confirmed the move to terminate the contract.
“The current government is looking to completely solve the waste management problem in the next two years. The previous government talked a lot about environmental issues but there was no actual work done to solve the issues,” said Adeeb.
The termination marks the latest in a number of terminated or renegotiated contracts signed under the government of Mohamed Nasheed, while current President Abdulla Yameen continues moves to improve the country’s investment climate.
City Mayor Mohamed Shihab informed Minivan News that Malé City Council had not been consulted over the decision despite being one of the parties involved in the project.
“The city council will continue on its waste management operations like it has been so far. The work so far has been done by MCC and not Tatva and this will not lead to any differences in the short run, however we would need to start looking into long term alternatives again,” said Shihab.
The council – dominated by the opposition Maldivian Democratic Party (MDP) – has this year introduced trash cans and fines for littering. Persistent conflicts with the central government, however, have continued.
The agreement with Tatva was presented as a solution to the capital’s ever-pressing waste management issues, with formal plans to generate power by recycling the waste and improving existing waste management systems.
However, the agreement faced delays following the fall of the MDP government in 2012, with renegotiations initiated as the new government of Dr Mohamed Waheed sought more “mutually beneficial” terms.
Mayor Shihab told Minivan News in May that the latest delay to the project involved the failure of the finance ministry to fund the repair of equipment required as part of the deal.
Similar problems have beset other Indian investors in recent years, with a US$190 million housing project in Malé by India’s TATA group delayed for more than two years pending renegotiation of the original terms agreed with Nasheed’s MDP government.
Negotiations were concluded last month and the project resumed, with the Indian High Commission in Malé confirming that the deal now had “firm assurances from both Government of Maldives and TATA Housing”.
The most prominent Indian project curtailed by the change in government was the US$511 million lease to develop Ibrahim Nasir International Airport, terminated in November 2012 after the contract was declared void by Waheed’s cabinet.
After GMR challenged the legality of the move in a Singapore court of arbitration, the contract was deemed “valid and binding”, leaving the Government of Maldives liable for damages. Though the figure owed is yet to be determined by the court, it is expected to be considerably less than the US$1.4 billion claimed by GMR.
A 2012 report in India’s Business Standard brought forward concerns by Indian companies operating in the Maldives over political interference which they companies claimed is derailing their substantial investments in the country.
Since assuming the presidency in November 2013, Abdulla Yameen made the introduction of special economic zones the flagship of his legislative agenda, passing the SEZ Act in August.
With a minimum investment of US$150 million required for any investment projects in the special economic zones, Adeeb – also chairman of the SEZ investment board – has suggested that just one of the government’s proposed mega-projects could diversify the Maldives’ tourism-reliant economy.
While no major deals have yet been signed, a team of Chinese surveyors are expected in the country this week to carry out a survey for Malé-Hulhulé bridge – a project mooted by successive administrations.