Fenaka faces financial struggles, challenges to pay salaries

Fenaka Corporation Managing Director Muaz Mohamed Rasheed said today that the company is facing significant financial challenges, including difficulties in paying employee salaries for both last month and this month, due to a shortfall of MVR 86 million above its monthly revenue.

Speaking to Mihaaru News, Muaz said that the company needs MVR 299 million each month to operate but only generates about MVR 213 million in revenue.

Fuel costs, which amount to MVR 98 million per month, are the largest expenditure, followed by employee salaries, which total MVR 79 million, amounting to 35 percent of total revenue.

Fenaka also has to pay MVR 30 million monthly for loans, MVR 10.5 million for an out-of-court settlement, and MVR 17 million in administrative expenses.

Muaz said that if the company does not receive the additional MVR 86 million, about 2,000 employees could face layoffs.

"If layoffs are not an option, the government or the Ministry of Finance must step in with financial assistance," he said.

He also said that Transparency International reports reveal that political positions were given within the company beyond its needs which have contributed to the financial strain.

Fenaka has outlined several measures to cover its expenses, including increasing the government subsidy for its sewerage services, which currently amounts to MVR 11 million but costs the company MVR 35 million per month.

The company has also requested the Ministry of Finance to defer loans and payments, including MVR 150 million from a 2014 loan, MVR 33 million from a MVR 120 million loan, and MVR 231 million in loans from last year.

Fenaka has also sought restructuring of a MVR 400 million loan from the Maldives Islamic Bank and assistance in recovering MVR 350 million owed by government agencies.

Muaz further stated that while Fenaka has made efforts to reduce administrative costs by saving MVR 160 million in operating expenses as of October 2024, it is clear that cutting costs alone will not be sufficient.

The company urgently requires government assistance to stabilize its financial position, he said.

Since the current administration took over, Fenaka's debt has exceeded MVR 4.3 billion, with unpaid bills and unrecorded work across various islands.