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.