NDTV ProfitBusiness NewsCancellation of GMR's $511 million Maldives airport project stayed: Top 10 developments
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Cancellation of GMR's $511 million Maldives airport project stayed: Top 10 developments

03 Dec 2012, 12:41 PM IST
NDTV Profit
NDTV Profit
  1. Shares in GMR Infra shot up nearly 6 per cent after the Singapore High Court stayed the termination of a $511 million airport contract that the GMR group was executing in Maldives. GMR, which has already invested $220 million in the project so far, can continue operations at the Male airport, the court ruled.
  2. "The Singapore High Court has passed an injunction against the Maldivian Airport Company Limited (MACL) and the government from taking any action based on the November 27 letter," a GMR spokesperson said.
  3. Even before the court’s order, GMR officials were fairly confident that they would get legal remedy. "We had signed a contract for 25 years... There is another 23 years to stay here. We are bringing the largest FDI to this country and there is no reason why we should not stay on," Arun Bhagat, the head of corporate communications at GMR Group, had told NDTV last week.
  4. Lenders to GMR had also written to the Maldives government seeking protection of their interests in the $511 million airport deal, which was cancelled by the island nation. The lenders’ agreement with the Maldives government is separate from the deal Maldives signed with GMR. Axis Bank is the syndicator and lead underwriter to the $511 million project, which has a debt component of $358 million.
  5. The deal was reportedly cancelled because the contract contained a $25 airport development charge per outgoing passenger which was not authorised by the Maldives parliament.
  6. The cancellation of the deal signed in 2010 followed President Mohamed Waheed's failure to renegotiate terms, sources close to president's office had told Reuters last week. Mr Waheed had said the contract was invalid and was signed under "dubious" conditions by the Nasheed regime.
  7. The contract with GMR was signed when former president of Maldives Mohamed Nasheed was in power. Mr Nasheed, who resigned in February in what he said was a coup, expressed grave concern over the termination of the contract.
  8. The cancellation had raised concerns over investor protection in the Maldives, which is seeking foreign financing of tourism projects, and follows a year of political turmoil, with the ousting of a president and months of unrest.
  9. India, which had reacted sharply to the termination, had in a high-level meeting reviewed overall relationship with Maldives. The Cabinet Committee on Security, chaired by Prime Minister Manmohan Singh, took into account the developments surrounding cancellation of the contract and its possible wider consequences.
  10. GMR had won the contract in 2010 to upgrade and operate the Maldives airport and build a new terminal after a global tender overseen by the World Bank. The project was implemented through a joint venture company comprising GMR Infrastructure Limited and Malaysia Airports Holding Bhd.


    (With inputs from agencies)
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