GMR Maldives project hits an air pocket

GMR Infrastructure’s airport development project in Maldives is caught in a political wrangle as the contract offered to it by the previous government has come under the scrutiny of the incumbent government.

“There are two parts to the development. One is modernisation of an existing terminal and the other is about building a new terminal. The existing terminal is operational and the work is also going on. The works at the new terminal are halted now,” a GMR official told DNA.

According to the official, the new regulations call for one more approval to be sought from the officials. “We have already applied for that approval and we are yet to receive it,” he said.

GMR Infra, which has successfully executed the development and modernisation of two airports in India and one in Turkey, had won the bid to expand and build the Male Airport with an outlay of $300 million (`1,607 crore) jointly with Malaysia Airports in June 2010.

Other Indian entities like the Anil Ambani group and GVK were also in race with their overseas partners to bag the contract. But GMR won it for 25 years with a target for completion in 2014.

As part of the contract, GMR was also collecting $25 as airport development charge from outbound passengers.

However, the project ran into turbulence in February this year after the Mohammed Nasheed-led government, which had granted the contract to GMR, was unseated by a dispensation led by Mohammed Waheed. The Waheed government is claiming it would renationalise the airport given away to GMR, a private foreign player.

The company’s $25 charge too has come under fire and the company has now sought international arbitration in Singapore.

“The hearing on this issue is expected to come up during early November,” said the official.

The airport has, in fact, developed into a major political issue with the opposition parties claiming that if the GMR project — the country’s first and the biggest foreign direct investment — is jeopardised, it would impact investor confidence and hinder further investments.

Meanwhile, queering the pitch further, another neighbouring country is keen on throwing out the Indian company to participate in the development of Maldives. “China is aggressively pursuing opportunities in Maldives and is moving closer to the existing government in Maldives. Chinese entities are keen on getting hold of the Male airport due to a variety of reasons, which is also a cause of concern for the Indian government in terms of national security,” said another source.

GMR officials offered no comment on the issue.
For the quarter ended June, Male airport recorded a total passenger traffic of 6.12 lakh and a total cargo movement of around 10 million tonne. While the gross revenue at the airport was at Rs289 crore for the quarter, GMR recorded a profit of about Rs39 crore.