GMR seeks $800 m in Male compensation
Bangalore-based infrastructure company GMR Infrastructure Ltd on Friday said that it will sue Maldives for more than $800 million after the government there terminated its airport contract on December 6, 2012.
In a press release, GMR Group Chairman G M Rao said, "We will be filing for compensation which we expect to be in excess of $800 million and includes the loss of profit over the concession (contract) period."
Since December 6, when the Maldivian government cancelled its contract with Bangalore-based GMR Infrastructure following a dispute on the concession fee charged by the company, GMR officials have steadfastly declined interview requests.
GMR Chairman G M Rao was not available for comment on the law suit being filed by the company. GMR Group CFO (Airports) Sidharth Kapur too declined comment.
Among other things, the agreement envisaged upfront payment of $78 million by the consortium to the Maldivian government and sharing of revenues between the government and the consortium over the length of the contract.
The consortium was allowed to collect $25 as airport development charge (ADC) and $2 as insurance surcharge from every departing international passenger at the Male airport from January 1, 2012.
Trouble started in December 2011 when a local Maldivian Court ruled that ADC could not be collected unless ratified by the Maldivian Parliament. In January 2012, the government said that ADC would be set off against the fee payable to the government.
However, the new government "unilaterally" revoked the permission to set off losses due to non-levy of ADC and insurance surcharge.
It also purportedly sought inputs from the International Finance Corporation (IFC), the lead transaction adviser to the Maldivian government for the project, to "understand the rationale and implications behind key aspects of the airport concession agreement," according to a October 5, 2012 communication sent by the IFC to G M Rao. GMR Infra took the matter for arbitration in Singapore as provided in the agreement, said the release.
However, the government "unilaterally"revoked the permission to set off losses due to non-levy of ADC and insurance surcharge. GMR Infra took the matter to arbitration in Singapore as provided in the agreement.
The Singapore Supreme Court passed an order on December 7, 2012 saying the Maldivian government had the "right to expropriate" the Male airport, subject to “sufficient compensation being paid to the consortium as per the agreement.”