The Maldives government settled the due amount of USD 271 million (MVR 4.1 billion) owed to GMR Group on Tuesday as compensation for breaking off the contract awarding operations of the Maldives’ main airport to the Indian firm.
Attorney general Mohamed Anil announced that Maldives Airports Company Ltd (MACL) has settled the compensation at a press conference held at the President’s Office on Tuesday evening.
The previous government of Maldivian Democratic Party (MDP) under former president Mohamed Nasheed’s reign had handed over Ibrahim Nasir International Airport (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 and the case had stretched for four years until a settlement was reached on October 25 this year.
The attorney general stated that MACL had rushed to settle the fine due to rising interests despite the Arbitration Centre’s lack of an imposed deadline.
“The money we paid back today included a loan of around 185 million [US] Dollars that GMR had taken from Axis Bank. That comprises the loan’s principal amount, interest and the arbitration costs over that issue. The remaining 86 million Dollars were what we had to pay back to GMR. That includes GMR’s expenses for the airport and related interests, the termination cost as set by the Arbitration and operation costs for the arbitration,” explained AG Mohamed Anil of the largest contract yet broken by the Maldives government.
“This money was not paid from the state budget. But all the state institutions have given us generous aid,” he added.
AG Anil noted that the greatest challenge faced by the Maldives government in their defence of breaking the INIA contract with GMR Group was the loss of certain documents from some state institutions, criticizing the negligence and incompetency of the persons in charge of those documentations at that time.
The attorney general also cited assessments conducted by experts during the INIA bidding process, prior to its handover to GMR, that the International Finance Corporation (IFC)’s role in the proceedings had resulted in major negligence to the Maldives. He described the contract drawn up with GMR as being biased towards the Indian firm whilst failing to protect the interests of MACL and the Maldivian government.
He went on to say that agreements and transactions made outside of the official contracts after GMR took the reins of INIA had further debilitated the Maldives. He also noted that MACL had been forced to pay GMR for airport operations instead of the other way around.
“The situation had become so fragile. Hence, that contract was in no way advantageous to the Maldives and MACL.”
Highlighting that government had not received certain documents that should have been handed over when GMR stepped down, the attorney general also expressed disappointment over certain government officials of that time that had refused to aid in the Maldives’ defence despite having adequate information of the matter.
“Nevertheless, we have overcome all these challenges to successfully settle this matter as desired by the current government.”
AG Anil finally assured that despite settling the full compensation with GMR, it would not hinder any of the airport development projects currently ongoing in INIA.
GMR’s original demand was 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. The Maldives government had initially said this amount would total MVR 250 million.
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