The Maldives government has relaxed its cross-subsidy project development policy.
The previous regulations required contractors to pay the full project amount to the state upfront. However, following amendments, contractors are now required to pay a minimum of USD 1 million (MVR 150 million) from the total project value as an initial payment to secure land or a lagoon for development.
Ministry of Tourism stated that contractors will be required to settle the remaining payment within 60-days from the date of agreement. If the party fails to make the payment within the mandated time frame, the government has the discretion to dissolve the agreement.
Furthermore, under the new amendment, the state will not be required to pay any damages to a contractor upon revocation of an agreement. The state will also no longer be required to revert any of the payments made prior to the agreement cancellation, back to the investor.
The cross-subsidy policy in the Maldives allows the state to allocate islands, lands plots or lagoons to private financiers or contractors to carry out projects with socio-economic benefits. Per the amended policy, the Maldives President has the executive discretion to hand-over projects to specific parties, while the Economic Council is mandated with selecting contending bidders as final contractors.
Earlier, Ministry of Economic Development announced the development of six regional airports under the cross-subsidy policy.
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