New Delhi, December 1
Maldives and GMR continue to trade charges over the cancellation of the $500 million mega project awarded to the Indian infrastructure major for the development of the Male airport.

Male stuck to its view that there were terms in the agreement, which were given by the previous Mohammed Nasheed regime to GMR, that could not be implemented under the current Constitution and the legal system in the country.

A spokesperson for the Mohammed Waheed government said no taxes could be levied without parliamentary approval but the previous regime, had in the agreement, authorised GMR to levy taxes. This was not legally possible and that had turned out to be the sticking point.

GMR, meanwhile, described as ‘unilateral and completely irrational’ the issuance of notice by the Maldives Government, intending to take over possession and control of the airport.

The action by the Maldives Government was in complete disregard of and had been taken during the pendency of arbitration proceedings in the designated tribunal in Singapore, it added.

The $500 million dollar project had been hanging fire since the regime change in the Maldives in February. The GMR group, which operates airports in Delhi, Hyderabad and Istanbul, had won the contract during the regime of President Nasheed.

After a civil court in the Maldives ruled that GMR cannot claim $27 from passengers as airport development charge and insurance surcharge, the Indian firm had taken the case to Singapore for arbitration.

GMR claims that it has so far invested up to $230 million in the project, including $78 million that it paid upfront after it won the bid in 2010.

The debt equity ratio was 70:30 with the majority of the debt provided by an Axis Bank-led consortium. The net earnings per quarter from the airport is about $3 million. The airport has about 120 air traffic movements per day.

Quite clearly, a combination of factors, including the growing anti-India sentiment, the increasing influence of China in the Maldives, the role of Indian High Commissioner DN Mulay and some stringent terms and conditions in the agreement, have contributed to the termination of the agreement.