The ministry of external affairs called it a negative signal, saying the contract was terminated without consultation with GMR. This, after the contract was awarded through a global tender.
On Tuesday, the Maldives cabinet recommended termination of the contract to GMR for developing the Ibrahim Nassir International Airport in Male.
The $500 million project has been in trouble ever since there was a change of guard in the Maldives. The government headed by Mohammed Waheed has been against the contract given to GMR by his predecessor Mohamed Nasheed. Even when he was in opposition, Waheed was arguing against privatisation of the airport in Male, that too for a term of 25 years and allowing the developer to collect airport development fees.
GMR had set out on developing the airport after winning the project on build and operate mode for a period of 25 years with a clause to get the period extended by another 10 years. GMR Male International Airport Ltd (GMIAL) was to have a 77% stake in the project while Malaysia Airports Holding Berhad (MAHB) had the balance 23%.
“In a unilateral and completely irrational move the Government of Maldives has today issued a notice to GMIAL intending to take over the possession and control of the Ibrahim Nassir International Airport under the pretext that the agreement is void. This unlawful and premature notice on the pretext that the Concession Agreement is ‘void’ is completely devoid of any locus standi and is therefore being challenged by the company before the competent forums,” GMR said in a statement.
The company would further like to state that it has taken all measures to continue operations at the Ibrahim Nassir International Airport, thereby ensuring that this vital gateway to the Maldives is kept open.
“The company understands the importance of tourism to the economy of Maldives and having been entrusted the responsibility of operating and developing the INIA will discharge its duties to the fullest,” it said.
The Maldives government had earlier issued an order to GMIAL to stop construction activity at the airport and had also stopped the collection of airport development fees.
On the issue of the fees, GMIAL had approached the designated tribunal at Singapore for arbitration. The arbitration process is still pending adjudication.
Meanwhile, a Singapore high court had also granted an injunction against the Maldives government restraining it from approaching any civil court in the Maldives against GMR.
“We are taking all measures to ensure the safety of our employees and safeguard our assets. We are confident that the stand of the company will be vindicated in every way,” GMR said.
The Male airport project was to develop a 0.6 million square feet state-of-the-art integrated world-class passenger terminal increasing the terminal capacity to handle 5.5 million passengers per annum, and a 20,000 square foot VIP terminal, apart from landside development and improving existing terminal, to enhance passenger comfort and services.
Situated on Hulhule Island in the Maldives at the southwestern tip of India, INIA is one of the fastest growing airports in the region.
"The decision to terminate the contract with GMR without due consultation with the company or efforts at arbitration provided for under the agreement sends a very negative signal to foreign investors and the international community", MEA spokesperson said.
India, he said, expected that Maldives "would fulfil all legal processes and requirements in accordance with the relevant contracts and agreement it has concluded with GMR in this regard".
The government of India would continue to remain engaged with the government of Maldives on this issue, he added.
The GMR Group termed the Maldivian government's decision as "unilateral and completely irrational".
"In a unilateral and completely irrational move the Government of Maldives has today issued a notice to the GMR Male International Airport Ltd (GMIAL) intending to take over the possession and control of the Ibrahim Nassir International Airport (INIA) under the pretext that the agreement is void," it said in a statement.
"This unlawful and premature notice on the pretext that the Concession Agreement is void is completely devoid of any locus standi and is therefore being challenged by the company before the competent forums," it said.
The company said it disputes the contention that the Concession Agreement is void, and added that it has taken all measures to continue operations at the INIA.
"We are therefore taking all measures to ensure the safety of our employees and safeguard our assets. We are confident that the stand of the company will be vindicated in every way," the statement said.
Nearly eight months after the regime change in Maldives, some Indian companies present there, including GMR, are blaming political interference for creating "undue challenges" for them.