Vashafaru City Hotel: Developer claims land under Ministry's jurisdiction

The land plot on which Haa Alif atoll, Vashafaru island's city hotel is being developed is within the control of the Tourism Ministry as per a court order, and the project is being delayed due to lack of permits from the council and Ministry, said the legal team of the hotel's developer.

The project was awarded to the developer on 23rd August 2014, to develop the city hotel in the picturesque Vashafaru island within five years. However, the council issued a statement last week noting the significant delays in completing the project as well as multiple other issues regarding it.

Last Thursday, locals also took to the streets of the island to protest over the matter as well.

Speaking with local media outlet Mihaaru, one of the lawyers in the developer Tholhath Rasheed's legal team claimed that some of council's allegations in the statement issued last week was not accurate and accused the council of causing delays.

"This problem also happened because the ministry took more than three years to approve changes to the first work plan. It happened because of internal issues. The ministry looked into it and later informed the council that three years were lost due to ministry negligence . Therefore, the deadline should be extended without charging any additional fees,” they said.

The land plot in question was transferred to the Ministry by the President after it was declared a tourism zone. The development of the area began following an MoU between the Ministry and the Council.

According to the Vashafaru Magistrate Court's ruling on December 6, the land is under the jurisdiction of the Ministry and the MoU only gives the council the authority to do what the Ministry entrusts to the council. One of those tasks is to announce for a developer and hand over the project to them for the project to be carried out

Sharing the judgment, the lawyer said the council had not cooperated with the Tourism Ministry's request to extend the construction period to compensate for the time lost due to lack of permits.

They also said the lack of construction permits made it difficult to obtain other permits. These include the issue of non-availability of expatriate workers' quota, importation of goods and difficulties in obtaining money through banks, they said.

The lawyer further said that they tried to reach an amicable solution without involving the court but that their efforts were not reciprocated. So, last year, Tholhath filed a lawsuit seeking an order against the council for violating the lease agreement and to declare that the leased land belongs to the Tourism Ministry and that the Ministry has the power to send notices and enforce all required actions in connection with the lease agreement.

The ruling determined that under the agreement signed with the plaintiffs, the council's responsibility in respect of the leased land was solely to carry out the duties assigned by the ministry under the agreement signed on December 4, 2013 with the Ministry of Tourism and Vashafaru Council.

It further read that the council was in violation of Maldives' Tourism Act and the Decentralization of Administrative Areas Act, as well as regulations under relevant laws and related agreements. As such, the Ministry of Tourism has the power to cancel the agreement with the council, the verdict detailed.

Noting that the council did not comply with the Ministry's request to extend the agreement by three years due to the time lost while waiting for the Ministry's approval, the court also ordered Vashafaru council to amend the lease agreement between the council and Tholhath, as directed by Tourism Ministry, with the extension of the lost three-year period without any additional fees.

Due to the council's non compliance with the Ministry's initial notice, the developer also has a right to sue for damages, the verdict ruled.

However, the council instead chose to terminate the agreement entirely.

According to the statement issued by the council last week, when the council set a rental rate of MVR two per square foot for the 35,000 square feet of land adjacent to the city hotel, used as a storage area for construction equipment, the developer refused to pay, claiming that the land belonged to the Ministry and not the council.

Under the CSR component of the project, cable TV and internet services, construction of an extension building of the health centre, procurement of laboratory equipment and development of water and sewerage systems were also required to be completed, the council said. However, while this has not be done, the government has since started developing the sewerage system and has completed more than 80 percent of the work, the council also added.

As such, the council now claims that the island should be compensated by the private party for the work done by the government. The council also expressed dissatisfaction over the fact that that when dialogue was created with the ministry regarding the matter, the Ministry suggested that compensation was not warranted.

However, Tholhath's legal team claims Tholhath did everything required under the CSR component, and added that the sewerage work was commenced but had to be discontinued when the government started working on the sewerage system.

"The drawings were also submitted with the council's permission. At that point, the government announced that Vashafaru's sewerage system would be developed by the government. So it stopped. But no other project has been handed over instead," the lawyer said.

The lawyer also said that when they tried to develop the laboratory in the island, they were informed by the Ministry that the island does not require one due to the small population. Instead, the Ministry requested payment, which Tholhath continues to make to the Ministry, they said.

"Payment was made on the month in which the agreement was voided as well. So the council is unable to explain how the CSR component was violated. It's been three years since work has not commenced due to lack of permits. Now another three years are going by without permits. While all this was happening, Tholhath was still paying for the laboratory," the lawyer explained.

The issue of Vashafaru's city hotel escalated during the last presidential election when the then President Ibrahim Mohamed Solih visited the island as well. As a presidential pledge, Ibrahim Mohamed Solih said at the time that he was aware of the court's decision on the hotel issue and promised to resolve it as soon as possible.

The incumbent President, Dr Mohamed Muizzu also visited the island during his campaign and pledged to open the hotel within six months.

Vashafaru City Hotel's issue resurfaces again

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