NEW DELHI -- Indian developer GMR Infrastructure is claiming $803 million in damages from the Maldivian government for wrongful repudiation of an agreement to develop Male International Airport after the project was re-awarded to a company from China. The Ibrahim Nasir International Airport modernization and operation contract was awarded to GMR Male International Airport (GMIAL), a subsidiary of GMR Infrastructure, in 2010. Valued at over $500 million, the contract was unilaterally terminated in 2012, at a time when the government in the Maldives was headed by Mohamed Waheed, who came to power after the dramatic resignation of his predecessor following weeks of protest. The GMR group manages Indira Gandhi International Airport in New Delhi. After scrapping the contract, the government initiated arbitration proceedings seeking a declaration that the concession agreement with GMIAL was void. GMIAL disputed the wrongful cancellation of the contract. The matter went to arbitration at a Singaporean tribunal which in June concluded the agreement to be valid and binding. The court ruled that the Maldivian government and Maldives Airport Co. were both liable for damages to GMIAL. In stock exchange filings on Nov. 21, GMR said GMIAL has submitted claims for $803 million in damages. In addition, the Indian infrastructure major has made a plea to the tribunal for further compensation for loss of reputation. A GMR spokesman declined to divulge details of the case on the grounds that the deliberations are confidential. The information was disclosed in a regulatory filing because we are a listed company, he told the Nikkei Asian Review. It was in conformity with regulatory requirements. The Maldivian government awarded the new development contract to Beijing Urban Construction Group which will not run the airport. The deal was signed during Chinese President Xi Jinpings maiden visit to the Maldives in September. Abdulla Yameen, the current president of the Maldives, touted the airport project as a major investment opportunity. China will encourage more Chinese enterprises to actively engage in the economic transformation of the Maldives, Xi had said during his visit, adding: Our two sides have also agreed to engage ourselves in the building of a 21st century maritime silk route. Chinas efforts to win influence among Indias neighbors has triggered discomfort. There is a serious concern within the strategic community in India that China is trying to encircle India and increase its footprint by deepening ties with Indias neighbors like the Maldives, Sri Lanka, Bangladesh and Nepal, K. G. Suresh, a senior fellow at the Delhi-based think tank Vivekananda International Foundation, told the Nikkei Asian Review. In Nepal, GMR group has inked a project development agreement (PDA) with the government for a 900-megawatt hydro power plant worth about $1.15 billion. The Upper Karnali hydro deal, signed on Sept. 19, is the largest foreign direct investment for the landlocked, energy-starved country, and is GMRs largest investment outside India. Nepal Electricity Authority retains a 27% equity stake in the project without financial investment, including on all project royalties. Full ownership will be transferred to the government of Nepal at the end of the 25-year concession. Indias Himalayan neighbor has been seeking foreign investment to develop its hydro resources, and China, with which it also borders, has shown interest. Chinas alleged string of pearls strategy to spread its influence around the Indian Ocean region (which China says is a myth) has led to a tactical shift in Indian foreign policy as it rebuilds relations along its borders -- except with Pakistan which enjoys all- weather ties with Beijing. Prime Minister Narendra Modis first official visit after assuming power in May this year was to Bhutan. Modis second visit to Nepal since assuming office is for the South Asian Association for Regional Cooperation summit, the 18th meeting of the eight-member regional block. Though we want an improved relationship with China, there is a trust deficit, says K. G. Suresh. Meanwhile, GMR and Megawide Construction Corp., one of the leading construction companies in the Philippines, were jointly awarded the $700 million Mactan-Cebu International Airport (MCIA) project in April. Their joint venture company has taken full operational control of the airport in Cebu, the first airport in the Philippines to be privatized under the governments ambitious public-private partnership program to modernize key infrastructure assets. The GMR-Megawide Cebu Airport Corp. (GMCAC) will produce a new airport terminal in three years and upgrading of the existing one sooner. The consortium will operate the airport for 25 years. GMR manages Indias busiest international airport in New Delhi, and another in Hyderabad. In a recent statement, G.M. Rao, chairman of GMR Infrastructure, spoke of his companys experience in airport development and operations. We believe that our strategic plan for MCIA will result in the delivery of an efficient, passenger-oriented and commercially sustainable airport, he said.
Posted on: Mon, 01 Dec 2014 02:35:18 +0000
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