Nothwithstanding a Singapore High Court order on Monday staying the termination of GMR’s airport contract, the Maldivian government said it would wrest control of the airport later this week. Maldives called the order a wrong interpretation of law, asserting it would not honour the order.
According to GMR, the contract provided that in case of dispute, either the law of Singapore or the UK would prevail. However, Maldives said no injunction could be issued against a sovereign state and that its decision was “non-reversible and non-negotiable.”
“The High Court of Singapore has granted injunctive relief against the applicability and operations of letter dated November, 27 issued by the ministry of finance and treasury (MoFT), government of Male,” GMR said in a statement. “We would fight for our rights all the way through the court. That is very clear,” Andrew Harrison, CEO of the GMR airport project, told a news channel. “We expect that under the terms of the concession agreement...any orders issued by the (Singapore) court would be respected, because that is enshrined within the agreement,” he added.
“We will continue the airport takeover and Inshallah, next Saturday onwards, state-owned Maldives Airport Company Ltd (MACL) will be running the airport,” Mohamed Nazim, defence minister and acting transport minister, told reporters in Male on Monday, according to agency reports.
On the Bombay Stock Exchange, the GMR Infrastructure scrip rose 5.36% to end at R19.65, on a day when the benchmark Sensex fell 0.18%.
On November 27, acting on Maldivian government's instructions MACL terminated the contract awarded to GMR in 2010 during the previous regime of President Mohamed Nasheed.
The Maldivian government says where compensation is adequate, no injunction can be issued as per the laws of Singapore and the UK. It said that since the Maldivian government has initiated the arbitration process, GMR would be compensated.
The new Maldives government has alleged that the previous dispensation favoured the private company by allowing it to levy development fee and insurance charges of $27. GMR has said that as per their terms of agreement, it was entitled to charge the ADC of $27 per international passenger from January 1 , 2012. However, this was disallowed by a Maldivian civil court in December 2011.
GMR had subsequently written to the government that it would adjust the shortfall due to non-collection of ADC from the annual payable concession fee. The Maldivian government agreed to it in its letter on January 5, but retracted from the commitment after March 31 and asked it to refund the adjusted payments.
According to Maldives, the terms of the agreement agreed upon by the previous government would have made it pay GMR rather than earn revenues from it. It has been suggested that the Maldivian government would have had to shell out around Rs 2,800 crore over 25 years as per this agreement.
The airport project means a lot for the GMR group financially because it is profitable. Since Male is the gateway to Maldives, a major tourist destination, it would provide for a healthy revenue stream. As reported by FE earlier, the GMR group stands to lose around 20% of revenues coming from its airport operation business.
During the July-September quarter, GMR's total revenues from the airport segment stood at Rs 1,469 crore, of which around Rs 300 crore came from the Male airport operations. This was 35% growth over the revenues booked during the same period last fiscal. The period also saw strong operational performance with a 10% year-on-year growth in traffic to 0.7 million passengers. Ebitda grew year-on-year to Rs 71 crore and net profit at Rs 57 crore was up 193%.