Maldives airport plan grounded

The Maldives has scrapped a US$500 million contract to develop its international airport. STR New / Reuters

Rebecca Bundhun

The Maldives has scrapped a US$500 million (Dh1.83 billion) contract to develop its international airport.

The deal with India's GMR Group was the biggest foreign investment project in the Maldives and the move to cancel it has provoked criticism from India.

"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," said India's external affairs ministry.

The contract to develop and operate the airport was awarded to GMR - which is leading the consortium developing Delhi International Airport - in 2010 under the previous regime in the Maldives. The former president Mohamed Nasheed was ousted earlier this year.

"In a unilateral and completely irrational move the government of Maldives has ... issued a notice to the GMR Male International Airport intending to take over the possession and control of the Ibrahim Nasir International Airport (INIA) under the pretext that the agreement is void," said GMR, adding that it was challenging the assertion that the agreement was "void".

It said that it was striving to "ensure the safety of our employees and safeguard our assets".

The Maldives is the lowest lying country in the world, with a maximum natural height above sea level of less than 2.5 metres. Known for its luxury resorts, the country is made up of almost 1,200 islands.

Tourism is the main economic contributor in the Maldives, making up 28 per cent of the country's GDP and more than 60 per cent of its foreign exchange receipts.

"The company would further like to state that it has taken all measures to continue operations at the Ibrahim Nasir International Airport thereby ensuring that this vital gateway to Maldives is kept open," said GMR.

"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."

Under the agreement in 2010, GMR won the right to build and operate the airport for 25 years, which would be extendable by a further 10 years after that.

The plans included building a 55,700 square metre passenger terminal and increasing the terminal capacity to handle 5.5 million passengers each year.

The development plans also included a VIP terminal, landside development and improving the existing terminal. GMR Male International Airport is a joint venture company which is made up of GMR Infrastructure, which holds 77 per cent, and Malaysia Airports Holding Berhad, which has the remaining 23 per cent.

GMR has been given a week to leave the Maldives, according to reports.

"The government of India would continue to remain engaged with the government of Maldives on this issue, and would expect that the government of Maldives would fulfil all legal processes and requirements in accordance with the relevant contracts and agreement it has concluded with GMR in this regard," said India's ministry of external affairs.

"We call upon the government of Maldives and all concerned parties to ensure that Indian interests in Maldives and the security of Indian nationals are fully protected."

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