Male: In a sudden and unilateral action, Maldives on Tuesday decided to scrap the $500 million contract given to Indian firm GMR Group for developing Male Airport, leading to a diplomatic standoff between the two countries.
The GMR Male International Airport Ltd on Tuesday approached competent forums to challenge the decision of the Maldives government to take over possession and control of Ibrahim Nassir International Airport on the ground that the pact with the firm is void.
"We would also like to inform all that this action by the GoM is in complete disregard of and has been done during the pendency of Arbitration proceedings in the designated Tribunal in Singapore," a GMR release said asserting that the concession agreement is not illegal as pointed out by Maldives.
Reacting to the development in Male, India has called the act a bad message for foreign investors. GMR has termed the cancellation as unlawful and has planned to take legal action.
Moreover, India also asked Maldives to ensure protection of Indian interests and security of its nationals in the island nation.
EVP and Group Head - Corporate Communications, GMR Arun Bhagat said, "It's absolutely unlawful. We won the bid fair and square. It's been two years since we've been operating the airport and now to call it contract which is void ab initio, those are the words that have been used is strange to say the least. We've modernised the existing airport which is good for the country, the number of passengers are up which is good for the country, we are paying higher revenue share to the country which is again good for them because they can fund many programmes for the citizens of Maldives. Somebody's really got to tell me what's wrong with what we've done here. we believe that it's some kind of a wrong interpretation of what's supposed to happen. We are going through the letter in detail and obviously we'll seek legal remedy."
In a statement, the Maldivian government said the decision to terminate the Concession Agreement signed on June 28, 2010, between GMR-MAHB consortium, Maldives Airports Company Ltd and the government was based on a paper presented by the Attorney General's office prepared after a "thorough research done for the past nine months by a Cabinet Committee".
The paper is based on "technical, fiscal and economic issues" and also includes the legal advice of lawyers from the UK and Singapore regarding the agreement which was "legally invalid, and impossible to further continue".
The Attorney General's office will initiate arbitration proceedings against GMR Male International Airport Ltd (GMIAL), the Cabinet decided, the statement said.
Some coalition partners of the current regime headed by Mohamed Waheed had also held a rally against GMR on 3 November.
The $500 million project had been awarded during the tenure of former president Nasheed who was ousted in a coup last year.
In New Delhi, the External Affairs Ministry came out with a strong reaction saying the decision was taken without due consultations. India also asked Maldives to ensure Indian interests and security of Indian nationals in the Indian Ocean island country are "fully protected".
With inputs from PTI