Page added on November 1, 2012
Indian companies operating in the Maldives are expressing concerns over political interference they claim is derailing their substantial investments in the country, reports India’s Business Standard publication.
Officials involved in the Apex Realty housing development project – a joint venture between developers SG18 and Indian super-conglomerate TATA – told the Standard that the government was attempting to take over the site in Male’ given to the company, with the intention of building a new Supreme Court.
After being elected in 2008, former President Mohamed Nasheed moved the Supreme Court into the opulent palace of his predecessor, Maumoon Abdul Gayoom, opting for the less lavish building of Muleaage as the Presidential residence.
“A recent meeting held with the Maldivian Housing Minister is said to have ended abruptly with officials from the firm and the Indian High Commission being asked to leave,” the Standard reported.
President Mohamed Waheed’s Media Secretary, Masood Imad, confirmed to the publication that the meeting had taken place, and said the minister had given them time, even though it was “unannounced”.
“I am told that the meeting continued for about an hour. TATA Housing officials were raising issues that were not in the contract but the Minister accommodated most of the issues. Most of the issues discussed were procedural,” Masood was reported as saying.
A source involved in the deal confirmed to Minivan News that the government had offered land in Hulhumale’ to the developers as an alternative to the agreed site in Male’. However, the same source said the developers felt the change would affect the financing of the project.
Minivan News was awaiting a response from the Indian High Commission at time of press.
Indian infrastructure giant GMR has also raised concerns about the new government’s handling of its concession agreement to manage and develop Ibrahim Nasir International Airport (INIA), signed with the former administration.
The company has previously sought to downplay its issues with the government in the media, however “public statements and press conferences of some government ministers and coalition party leaders are clearly aimed at arousing public sentiments against GMR and creating undue challenges for us,” the company told the Standard.
“To gain political advantage, some elements of the government itself have started hampering the smooth functioning and development of the airport,” the company added.
Moreover, the government was passing new laws and policies that were harming its interests.
“GMR was granted required approvals and licenses to operate Arrival Duty Free on December 30, 2011. We made huge investments in development of arrival duty free area. However, the government later revoked the licence citing that earlier the licence was given in error,” the company told the Standard.
“Similarly, On April 23, 2012, the GoM (Government of Maldives) passed an amendment to Business Registration Bill to restrict any foreigner to carry on Duty Free business, cargo clearance business, and bonded warehouse business at the airport. This step is clearly directed against GMR.”
The comments follow a US$2.2 million bill handed to the government’s side of the airport contract – the Maldives Airports Company Limited (MACL) – following a third quarter in which the airport developer deducted its contractually-mandated airport development charge (ADC) from concession fees due the state.
In the first quarter of 2012 the government received US$525,355 of an expected US$8.7 million, after the deduction of the ADC. That was followed by a US$1.5 million bill for the second quarter, after the ADC payable eclipsed the revenue due the government.
Combined with the third quarter payment due, the government now owes the airport developer US$3.7 million.
The US$25 ADC, stipulated in the developer’s concession agreement signed with the Nasheed government, was to be levied on all outgoing passengers at INIA.
However, the former opposition Dhivehi Qaumee Party (DQP) – now part of the coalition government – in late 2011 filed a successful case in the Civil Court challenging the legality of the charge on the grounds that it was a tax not approved by parliament.
Nasheed’s government instructed MACL to deduct the ADC from the concession fees due the government while it sought to appeal. However soon afterwards Nasheed resigned in controversial circumstances, handing power to his Vice President, who swiftly replaced much of the government with appointments from the former opposition.
Speaking to the Standard, Masood said that the government “will not target any investment, Indian or otherwise unduly. The assurances given by the President securing foreign investments in Maldives are valid and stand true.”
However Attorney General Azima Shukoor told media this morning that “After the necessary research, we have said that the GMR agreement causes financial loss to the state.”
She expressed confidence that the government would win the case in the Singapore court of arbitration, the next hearing of which is to be held on November 19.
“I would like to point out that the Anti-Corruption Commission (ACC) still hasn’t finished the complete investigation into the GMR matter. This also presents difficulties for us, she said.
“I have met with the heads of ACC and Auditor General two, three times. I can’t say anything about the investigations. But I haven’t heard back anything after I shared the information I had available with them.”
Other elements of the government have also persistently called for the airport’s nationalisation.
DQP Leader Dr Hassan Saeed, now Waheed’s Special Advisor, at the launch of a book (in Dhivehi) last month criticising the airport development, said that the “only way to reclaim the airport from GMR” was to invalidate or cancel the concession agreement.
Home Minister Dr Mohamed Jameel – also a DQP member – said at the launch that it was the “duty of the most capable people in the country” to step forward and help “liberate” the nation from “grave problems” during the current “difficult times”.
The religious Adhaalath Party, likewise aligned with the current government – in September called for a “national jihad” to nationalise the airport development.
Another government-aligned party, the Jumhoree Party (JP) headed by resort tycoon, media owner and member of the Judicial Services Commission (JSC) Gasim Ibrahim, has also called for the nationalisaiton of the airport.
In September Gasim urged the government in to reclaim the airport, even at a cost of US$700 million, as it was worth “a thousand times more”.
Gasim’s comments followed GMR’s decision to suspend the credit facility for his Villa Air airline, due to unpaid bills totaling MVR 17 million (US$1.1 million) for fuel, ground handling and passenger service fees.
In late September GMR sponsored the inaugural Maldives Travel Awards, held on Gasim’s Paradise Island resort.
Paradise won the title of ‘Leading Business Hotel’, while Gasim’s Villa group of companies also picked up an award for ‘Leading Domestic Airport’. Gasim himself received a ‘Lifetime Achievement’ award.