GMR to sue Maldives government for $800 million in damages
13 Dec 2012
After having been forced to hand over Male airport to the Maldives government last Saturday, infrastructure major GMR plans to sue the Maldives government for compensation of over $800 million, The Economic Times said today.
According to GMR, which has been operating the Ibrahim Nasir International Airport at Male at an investment of $511 million, says it felt cheated for having the contract cancelled over an illegal component - airport development charge included in it, of which it was not aware.
According to GMR (Airports) CFO Sidharath Kapur who spoke to ET, the estimated compensation that GMR would seek from the Maldives government is over $800 million. He added, the company would work out a legal strategy and also continue to keep the government updated on various issues and seek appropriate support at the right time.
GMR and Malaysia Airports Holdings Berhad won the contract in November 2010 for modernisation and operation of the Male airport for 25 years. In the event of any dispute it was to be settled un the jurisdiction of Singapore. The Indian company's investment was its largest in the archipelago nation.
However, GMR's decision to impose an airport development charge (ADC) of $25 per departing passenger turned out to be a friction point between the company and the government, especially after a change of regime in the Maldives in February.
GMR on its part feels cheated and taken advantage of after spending $511 million in the Male project.
The Maldivian government claims the company had not conducted enough due diligence but Indian investors are enthused by the company's decision to go for legal action.