Maldives Airports Company Ltd (MACL) declared that it will cut down company expenses to overcome operational challenges caused by the company’s settlement of USD 271 million (MVR 4.1 billion) with India’s GMR Group.
The company had paid its due amount of USD 271 million last month to GMR as compensation for breaking off the contract awarding operations of Ibrahim Nasir International Airport (INIA) to the Indian firm. The government had stated at the time that the money had been paid directly by MACL, outside the state budget.
Speaking at MACL’s MD Awards ceremony held late Tuesday to award certificates to outstanding staff, the company’s Managing Director Adil Moosa stated that the company will face certain challenges due to the hefty USD 131 million (MVR 2 billion) that came out of the company’s reserves to settle the GMR compensation. He admitted that the company’s expenditures so far had been such that settling such a large amount in full was not taken into consideration.
Moreover, Adil disclosed that MACL had set aside a fifteen percent equity for the major development and expansion projects of INIA currently underway.
“… with such a great cost paid in full at once, we need to consider this company’s works and expenditures as we advance, and see if some aspects can proceed in the same way as now or not,” said MD Adil.
He was quick to assure that the challenges faced by MACL will not affect any of INIA’s services or the remuneration of company employees.
MACL had also earlier assured that its hefty compensation to GMR will not hinder any of INIA’s development and expansion projects, which total an expense of nearly USD 800 million (MVR 12 billion).
The previous government of Maldivian Democratic Party (MDP) under Former President Mohamed Nasheed’s reign had handed over INIA’s operations to GMR Group for 25 years. Two years later, the government of Former President Mohamed Waheed who rose to office following Nasheed’s fall from power, had taken back the airport from GMR as the agreement was debilitating to both MACL and Maldivian citizens.
GMR had filed the case at Singapore’s Arbitration Centre tribunal, seeking USD 1.4 billion as compensation over the broken contract. However, Singapore’s Arbitration Centre had deemed the amount too high and finally settled on USD 208 million with four years’ of 17 percent interest and operational costs.
MACL had settled the compensation with the aid of Maldives Monetary Authority (MMA) which had purchased a bond of USD 140 million from MACL from the state reserve.
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