Newly elected Govt at Maldives has terminated the contract given to India based GMR Group for construction of an International Airport as awarded by a previous Government for a value of $500.
The Maldives cabinet has annulled the agreement made with GMR Group to operate the Ibrahim Nasir International Airport (INIA), at Hulhule Island nearby capital Male, Maldivian President’s Press Secretary Masood Imad said.
The $500 million contract awarding the airport to GMR Group for 25 years was signed on June 28, 2010, by then president Mohamed Nasheed’s government.
Maldives Attorney General Aishath Azima Shakoor had announced cancellation of the contract and revealed that the decision has been conveyed to Maldives Airports Company Limited (MACL). GMR has also been informed of the decision, Azima added, according to haveeru online.
The Maldivian government said the decision to terminate the agreement signed on June 28, 2010, between GMR-MAHB consortium, Maldives Airports Company Ltd and the government was based on a paper presented by the Attorney General’s office prepared after a “thorough research done for the past nine months by a Cabinet Committee”.
The AG’s paper is based on “technical, fiscal and economic issues” and includes the legal advice of lawyers from Britain and Singapore regarding the agreement which was “legally invalid, and impossible to further continue.”
The GMR contract “represents the single largest FDI in the history of Maldives”, India said, adding the decision to terminate the contract “without due consultation with the company or efforts at arbitration provided for under the agreement sends a very negative signal to foreign investors and the international community”.
Given strong bilateral relations with the Indian Ocean island nation, India was surprised and distressed at the unilateral decision.
It said the Maldives government’s decision to cancel the GMR contract would send “a very negative signal” to foreign investors.
External Affairs Minister Salman Khurshid said: “Whatever legal decision is taken (by Maldives) will have repercussion here.”
The decision was taken without due consultations, said the external affairs ministry.
India also asked the Maldives to ensure Indian interests and security of Indian nationals in the Indian Ocean island country are “fully protected”. The investment by GMR represents the single largest foreign direct investment in the history of Maldives, it noted.
“The decision to terminate the contract with GMR without due consultation with the company or efforts at arbitration provided for under the agreement sends a very negative signal to foreign investors and the international community,” said Syed Akbaruddin, the spokesman of India’s external affairs ministry.
“We call upon the Government of Maldives and all concerned parties to ensure that Indian interests in Maldives and the security of Indian nationals are fully protected,” he said.
“The government of India proposes to monitor the situation in Maldives closely and is prepared to take all necessary measures to ensure the safety and security of its interests and its nationals in the Maldives. The government of India will continue to be seized of the matter,” said the spokesperson.
The $500 million contract awarding the airport to GMR Group for 25 years was signed on June 28, 2010, by then president Mohamed Nasheed’s government, but hanging in balance ever since the regime change in the Maldives earlier this year.
The Maldivian cabinet’s decision came in the wake of increasing pressure from the pro-government political parties to annul the agreement.
The agreement signed between GMR and former president Mohamed Nasheed’s government to develop INIA has been labeled as “illegal” by pro-government political parties, who allege it was signed despite objections from the island nation’s parliament.
President Mohamed Waheed Hassan told an Indian newspaper that the agreement is a “bad contract” signed “conceivably under dubious conditions” by the previous government, the daily said.
The GMR contract “represents the single largest FDI in the history of Maldives”, India said, adding the decision to terminate the contract “without due consultation with the company or efforts at arbitration provided for under the agreement sends a very negative signal to foreign investors and the international community”.
Meanwhile, GMR Male International Airport Ltd (GMIAL) said the “unilateral and completely irrational move” of the Maldives government “is void”.
“This unlawful and premature notice on the pretext that the Concession Agreement (CA) is ‘void’, is completely devoid of any locus standi, and is, therefore, being challenged by the Company before the competent forums. The Company disputes that the CA is ‘void’,” it said in a statement.
It said that the consortium consisting of GMR and MAHB (Malaysian Airport Authority) had been awarded the contract through a global tender conducted by the International Finance Corporation (IFC), Washington, a member of the World Bank.
After the civil court in the Maldives ruled that GMR cannot charge $27 from passengers as Airport Development Charge (ADC) and insurance surcharge, the Indian infrastructure giant had taken the case to Singapore for arbitration.
GMR was deducting $27 from each passenger since January.
The cabinet’s decision came in the wake of increasing pressure from the pro-government political parties to annul the agreement.