Mercial International LLC, a company described as an American multi-national firm, has decided to withdraw from its agreement with the Upper North Utilities (UNU) Ltd. under which the two companies had entered a USD 180 million deal in August 2010.
Merciel had entered into a joint-venture, worth approximately 2.3 billion in local currency, with the UNU Ltd. under which it would invest in the Upper North Province of the Maldives to provide electricity, drinking water, gas and drainage services to all the islands of the Province.
The agreement, one of the biggest development projects announced in the nation’s history, was called off in July this year. Had the project been implemented, all inhabited islands in H.A. Atoll, H.Dh. Atoll and Sh. Atoll would be supplied with basic utilities under the venture.
In a letter sent to UNU Managing Director Abdullah Waheed, Merciel stated that it has decided to call off the agreement due to UNU’s failure to provide the information on UNU assets or capital necessary to form the joint-venture company to carry out the project. Merciel also noted the fact that UNU had not taken any steps about the proposals of reform made by its technical team after its visit to the area.
“As UNU has failed to respect our commitment and to provide the necessary cooperation, we have decided to withdraw from our agreement and to bring an end to all the talk on the joint-venture company immediately”, read the letter from Merciel CEO Bradley Smegal.
According to information obtained by Sun, the agreement between Merciel and UNU obligated both the companies to evaluate their assets and share the information with each other. Despite repeated requests by Merciel, UNU had failed to evaluate its assets and provide the information needed to Merciel.
According to a copy of a letter written by Ali Hashim, former General Manager of UNU, and addressed to the Managing Director of UNU, the company had deliberately delayed the evaluation against the repeated requests of Merciel to do so.
According to the letter of Ali Hashim, UNU submitted an audit report of the company which lacked the necessary information to Merciel, causing the latter to lose heart in the whole venture.
When asked about the matter, Managing Director Abdullah Waheed of UNU affirmed the cancellation of the venture, and said that the cancellation was due to failure on both sides to comply with some agreed requirements.