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Corporate Dec 7, 2012

GMR to hand over airport to Maldives tonight

By Sindhu Bhattacharya

New Delhi: The Singapore Court's decision is surely a blow to GMR which will have to handover the Male airport to the Maldives government today but it still does not answer the crucial question: is the concession agreement signed between GMR and Maldives void because one clause in it was struck down by a Maldives Civil Court earlier?

The Maldives government has threatened to take over operations of the GMR Male International Airport (GMIAL) on the midnight of 7-8 December, saying a concession agreement signed between GMR and the previous government is void. GMR took over operations and development of the airport in June 2010.

But by the look of things at present, GMR may well be evicted from the airport on the midnight of Dec 7-8 . Reuters

A senior Indian government official said on Thursday that while the Singapore court's decision upholds Maldives' right to take back the airport (GMR Male International Airport) from GMR, there is still no clarity on the status of the concession agreement.

But by the look of things at present, GMR may well be evicted from the airport on the midnight of 7-8 December unless a new opinion is forthcoming on the status of the concession agreement.

Buoyed by the verdict, the Maldives president's media spokesman Imad Masood told Reuters, "We will take over. We will enroll all those people from GMR who wish to join. Those who don't can go home. By Friday midnight we will take over." The Maldives would pay compensation to GMR , he added.

A spokesperson of the Ministry of External Affairs said this evening that though the ministry's legal team is still evaluating the court's decision, "We hope all relevant contracts are adhered to and legal processes honoured."

The spokesperson pointed out that GMR's was the single biggest foreign investment by any company in Maldives and stressed that the legal process should be carried to their logical conclusion. He did not comment on any compensation amount that GMR is seeking from the Maldives government.

Meanwhile Masood Iman, press secretary to the Maldives president, told the Hindu Business Line a few hours ago that the Singapore court was of the opinion that the contract allowed Maldives Airports Company Ltd (MACL) to take back the airport from the GMR-led joint venture consortium. Imad did not respond to calls made by Firstpost.

So from all available indications, GMR may have to hand over the airport in another 30 hours. Imad also told HBL that there is no clarity yet on any compensation amount to be paid to GMR for evicting it mid-contract. "We will pay compensation to GMR. This will be decided by a court in Singapore. We have heard figures of $700 million, $550 million, $350 million and also $220 million.

Let the Singapore court decide and we will abide by the judgement. The modernisation of Male airport will now be taken up MACL. The Maldives government will again float the tender and get more parties in to take the work forward. The tender will be floated by the Maldives government in a transparent manner and after consulting investors. The mistakes made during the float of the tender which has been cancelled will not be repeated."

Meanwhile, the external affairs ministry spokesperson rubbished reports that a special representative of the Maldives president camped in Delhi for 45 days to get an audience with the prime minister to explain the airport situation, terming them "a figment of someone's imagination".

On 1 December, the Maldives cabinet annulled the contract awarded to GMR-led consortium to modernise the Male airport. GMR has till 7 December to vacate the airport. GMR officials had asserted on Wednesday that the company has done nothing wrong, it wants to continue airport operations and if it is forced to seek compensation, the amount should be close to $700 million.

by Sindhu Bhattacharya

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