Scrapped Deal

Southasia - - Briefing -

In a sud­den turn of events, the Mal­di­vian government re­cently an­nulled GMR In­fra­struc­tures’ $500 mil­lion con­tract to con­struct Male’s In­ter­na­tional Air­port. Ac­cord­ing to re­ports, GMR had in­vested up to $230 mil­lion in the project, in­clud­ing $78 mil­lion that it paid up­front af­ter win­ning the bid in 2010.

In re­sponse to the de­ci­sion, In­dia’s High Com­mis­sioner to the Mal­dives, Dnyanesh­war Mu­lay, called on the For­eign Min­is­ter of the Mal­dives, Ab­dul Sa­mad Ab­dul­lah to con­vey New Delhi’s con­cerns over the sud­den ter­mi­na­tion of the project. The move to call off the project, one of the largest global in­fra­struc­ture con­tracts won by any In­dian com­pany in re­cent his­tory, led to strong re­ac­tions from New Delhi. Both coun­tries have pre­vi­ously en­joyed sta­ble for­eign re­la­tions. How­ever, it is be­lieved that the re­cent uni­lat­eral move by the Mal­di­vian government will cre­ate rifts in the bi­lat­eral re­la­tions.

With In­dia’s sup­port out of the pic­ture, the Mal­di­vian government has trans­ferred the li­cense of op­er­a­tion to the state-owned Male Air­ports Com­pany or MACL. MACL has also al­lowed the 1,800 em­ploy­ees af­fil­i­ated with the GMR Male In­ter­na­tional Air­port project to re­quest for trans­fers into MACL.

The air­port project be­came con­tro­ver­sial fol­low­ing the oust­ing of former Pres­i­dent Mo­hamed Nasheed. GMR ac­quired the bid dur­ing Nasheed’s ten­ure. There­fore, the cur­rent Pres­i­dent of the Mal­dives, Mo­ham­mad Wahid Manik, termed the air­port con­struc­tion project as ‘void ab ini­tio’ (null and void). An­a­lysts ar­gue that the an­nul­ment of the project is a strong re­flec­tion of the an­i­mos­ity that ex­ists be­tween the two premiers. This de­ci­sion is bound to not only af­fect In­dian in­vestors but in­vestors world­wide and tam­per their per­cep­tion of the Mal­dives as an in­vest­ment op­por­tu­nity.

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