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Corporate Dec 8, 2012

GMR gives in, Maldives takes over Male airport

Male: At midnight overnight, Maldives' state-run MACL took over the operations of the Male international airport from GMR after the Indian infrastructure major lost a week-long legal battle over the "unilateral" termination of its $511 million airport modernisation contract.

"Maldives Airport Company Limited has taken over the operations of the Ibrahim Nassir International Airport from GMR. The transfer process was very smooth and seamless," President Mohamed Waheed's Press Secretary Masood Imad said.There would be a three-week transition period during which GMR and state-run MACL would work together, he added.

"GMR has agreed to work with MACL for the next three weeks or so to help MACL with paperwork and to clear any doubts since the Indian firm was operating the airport for last two years," Imad told PTI.

The change of operators would not lead to any job losses or any vendetta, and airport workers, including Indian workers, "who wish to stay back after GMR leaves will be taken on board by MACL," Imad noted.

It's the end of the runway for GMR in the Maldives. AFP

Terminating the $511 million contract with GMR on 27 November, the Maldivian government had given time till midnight of Friday-Saturday for the Bangalore-based firm to hand over the airport operations.

The handover took place a day after the Singapore Supreme Court ruled that the Maldives government had the "power to do what it wants, including expropriating the airport", dealing a blow to GMR's case. GMR had earlier secured a temporary reprieve after the Singapore High Court stayed the termination of the contract.

The contentious issue saw various twists and turns on the legal and the diplomatic fronts, with India expressing its strong displeasure over the "unilateral" decision to terminate the contract and conveying the message that the move would have an adverse impact on the bilateral ties.

Top GMR officials, including Kiran Kumar Grandhi, Business Chairman Urban Infra & Highways, who is also GMR chairman GM Rao's son, had met with Maldives President earlier on Friday.

In 2010, the GMR-led consortium won the right to build and operate the Ibrahim Nasir International Airport (INIA) for 25 years, extendable by an additional 10 years.The deal was signed during the regime of previous government headed by Mohamed Nasheed.

But after the regime change in February, GMR's business fortunes in the Maldives too changed.The current government in Male headed by President Mohamed Waheed says the contract was signed under "dubious" conditions and was "void", a charge hotly denied by the Indian firm.

The Male airport venture has been the most profitable for GMR in terms of its airports business segment. The company had so far invested about $250 million on managing and upgrading the facilities at the Male airport.

The issue that proved most contentious between GMR and the Maldivian government was the levy of an Airport Development Charge (ADC) of $25 per passenger and an insurance surcharge of $2 per passenger. The levy was supposed to be charged from 1 January this year, but a local civil court had struck down the proposal in December last year.

After that, the then government headed by Nasheed agreed to compensate GMR against the levy. However, the decision was reversed by the new regime early this year, leading to GMR filing for arbitration in a Singapore court.

PTI


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