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Corporate Dec 4, 2012

GMR rubbishes handover, says Maldivian govt should abide by court

By Sindhu Bhattacharya

The row over GMR Infrastructure-led consortium's unceremonious eviction from the Male airport is bound to escalate. Refusing to back down despite a Singapore Court's stay on the eviction, the Maldives Government today claimed that GMR officials have agreed to a "seamless" transfer of the airport as per an eviction letter sent to them.

The letter, of which Firstpost has a copy, was sent on November 27 and since it speaks of handover of the airport within 7 days-technically the handover should be happening sometime today. But GMR rubbished these claims, saying it has not agreed to a handover. "We expect them to abide by the court ruling".

He also said his Government was unaware of any specific compensation amount that GMR or its lenders may be seeking from the Government of Maldives. Reuters

Speaking to Firstpost from Male, Media Secretary in the President's Office Masood Imad, said Maldives' Minister of Transport had a very "fruitful" meeting with GMR Male International Airport (GMIAL) CEO Airport Operations Andrew Harrison and the GMR representatives have agreed for a seamless transfer.

He also said his Government was unaware of any specific compensation amount that GMR or its lenders may be seeking from the Government of Maldives.

Imad quoted various media reports to say that several figures are doing the rounds: $550 million (which is the total project investment envisaged over the next 25 years), Axis Bank loan of $350 million (Axid Bank is leading a consortium of lenders for the Male airport project) and $220 million which Imad said has been mentioned to the media by GMR itself.

He went on to question a $100 million fee that GMR claims to have paid the Government of the time in 2010 (when the airport's concession agreement was signed) saying the Government of Maldives has received only $78 million of this. "Where has the remaining $22 million gone? Did it go to Nasheed's (president at that time) account?"

Imad said the entire concession agreement was signed "under dubious conditions" and needs to be thoroughly investigated. "Our Government has already filed a criminal police complaint against GMR on this matter after we served them with an eviction notice".

Based on the directions of the new Maldivian government, Maldivian Airport Company Limited (MACL) had on November 27 terminated the contract given to GMR in 2010 during the previous regime of President Nasheed. The concession agreement between MACL and GMR Infra was signed in June 2010 and it specifically provided for the developer charging $25 fee per departing international passenger from January 2012 and a further $2 as insurance surcharge over the airport service charge.

But a Civil Court did not allow GMR to levy these charges, leading to a situation where the airport developer was forced to adjust the revenue share amount with the Maldives' airport operator. This eventually led to Maldives having to pay money to GMR instead of the other way round, prompting the Government to cancel the entire airport concession agreement.

GMR Male International Airport (GMIAL) is a joint venture company comprising GMR Infrastructure Limited (GIL) (77 percent) and Malaysia Airports Holding Berhad (MAHB) ( 23 percent). In 2010, GMIAL won the right to build and operate the Ibrahim Nasir International Airport (INIA) for 25 years, which is extendable by another 10 years.

by Sindhu Bhattacharya

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