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Corporate Dec 10, 2012

‘Not China, GMR’s poor PR skills led to ouster from Maldives’

By Firstbiz Staff

Was it really the airport development fee that cost GMR the contract to operate the Male international airport in Maldives or was it Chinese influence that resulted in the ouster of the Indian infrastructure firm?

Earlier this week, Mohamed Nasheed, former president of the Maldives said the distrust between India and China has indeed been growing and unfortunately countries like Maldives, which are dependent on their neghbours for economic support, are used as pawns in this battle for power.

Even GMR has hinted at the possibility of the involvement of a suspected foreign hand in the unceremonious termination of their contract, but the President of Maldives Mohammed Waheed has denied that China had anything to do with their decision.

"The only significant cooperation we have with China at this time is through development assistance... like building the museum, housing projects. I don't think India should worry about it at all," Waheed told the Hindu.

The President said other projects by Indian companies were on track in the country. Reuters

He also pointed out that other projects being carried out in the country by Indian firms had remained unaffected by the change in regime or its policies and said the only project they decided to reconsider was the construction of the airport, for which he blamed the previous regime.

His press secretary also sought to allay fears that other Indian firms operating in the country could face similar reprisal on account of the perceived anti-India sentiment.

"Let me tell you, there is no hand of any extremist elements in terminating the contract. Maldivians are not extremists and we are very sensitive to India sentiments. India was the first country to recognize our government," Masood Imad, the president's secretary told Mint.

Instead he blamed the Indian firm for its "poor job in public relations in Maldives" and insistence on adhering to the contract signed with the previous government while working on the project.

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. The $511 million contract with GMR was terminated on 27 November.

The Singapore Supreme Court ruled that the Maldives government had the "power to do what it wants, including expropriating the airport".

India had expressed its strong displeasure over the "unilateral" decision to terminate the contract but later expressed hope that the decision would not affect bilateral ties in any way.

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.

by Firstbiz Staff

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