GMR Infrastructure is unlikely to accept any compensation that may be offered by the Maldives government for scrapping the agreement to develop the Male airport. A senior GMR official on the condition of anonymity told FE on Tuesday that the company was still willing to talk to the government within the framework of the contract, but was not interested in receiving any compensation.
“We won the contract through a fair and square, transparent process. If it was an issue of compensation, we would have raised that on day one. They have not adhered to the contract. How can you trust them to pay the compensation?” the GMR official said. “Can they pay the accumulated cost to the company amounting to $700 million? I don’t think they have the capability to pay that kind of amount,” he added.
GMR’s proposed investment of $511 million in the Ibrahim Nasir International Airport at Male amounts to almost 40% of Maldivian economy. The country’s debt to GDP ratio, according to IMF, is marginally more than 80% while fiscal deficit is hovering at 16%. More than 40% of the government’s revenue is paid as salary.
According to media reports from Maldives, the ministerial cabinet committee that evaluated the agreement signed with GMR had said that the contract awarding the airport for 25 years was signed without the authorisation of the Attorney General.
However, FE is in possession of the letter of the then Attorney General of Maldives, Ahmed Ali Sawad, which stated on December 28, 2010, that the Concession Agreement was in accordance with the rules and regulations of Maldives.
He has given this opinion: “The project documents and the lease agreement have been duly authorised, executed delivered and ratified by all necessary corporate and governmental action.”
The recent controversy kicked off when Maldives on Monday said the government will proceed with its plan to evict GMR from operating the airport stating that no injunction can be issued against a sovereign state where compensation is paid.
GMR had won a crucial stay order from the Singapore High Court against their eviction by the Maldives government and maintained that it was the same sovereign state that has agreed to abide by the Singapore and English laws.