GMR seeks compensation of $1.4 billion for termination of contract

GMR has sought a compensation of $1.4 billion (MVR 21.5 billion) for the termination of the contract between GMR and the Maldivian government to develop and operate Ibrahim Nasir International Airport.

Indian paper The Hindu said that GMR sought this compensation following the “wrongful termination” of the 25-year contract, and that the claim was filed today before an Arbitration Court in Singapore.

The Hindu said that the papers for the claim consist of 75 pages plus annexures and attachments, and the figure of USD 1.4 billion was reached after taking into account loss of profit, payments made to subcontractors besides others.

The paper said that the Maldivian government and the Maldivian Airport Company Limited (MACL) will give their responses to the claims.

GMR said earlier that the Maldivian government should provide GMR a compensation of $800 million following the termination of the contract.

GMR’s Chief Financial Officer Sidharth Kapoor said earlier that they had sent a letter the Maldivian government indicating a number more than $800 million as compensation. The Maldivian government said back then that it should not have to pay this amount to GMR.

The government said that according to their information, GMR had invested $150 million out of $350 million loans obtained for the development of the airport.

“We will go in for a forensic audit, as we want to see how much money has poured in to GMR coffers through the Male International Airport, and how much actual money has been spent here. According to our information, GMR has cashed in only $150 million of the about $350 million loan it had bagged through a bank,” said the President’s Press Secretary, Masood Imad.

Then Attorney General Aishath Azima said on the day the agreement was terminated that the cabinet decided to terminate the agreement following advice by lawyers that it was not a valid agreement, after considering the circumstances under which the agreement was signed, the High Court ruling regarding the Airport Development Charge (ADC), the letters sent to GMR by the government from January 2012 onwards, and other dealings after the agreement was signed.

The agreement between the Maldivian government and GMR was terminated on 27 November 2012, and the operation of the airport was handed over to MACL on 8 December 2012.