Maldives' main airport operator Tuesday admitted to challenges facing the state owned company after settling USD271 million to India's GMR Group saying that it would look to take steps to cut-down costs.
The government had been asked to pay over USD270 million in damages to India's infrastructure giant by an international arbitration tribunal over the abrupt termination of the contract to operate the airport.
The Singapore based tribunal had in February ruled in favour of the GMR group of companies on its dispute with the Maldives government on the airport project.
The government earlier this month had settled the compensation partly financed by a sale of a bond to the archipelago's central bank.
Maldives Airports Company Limited (MACL) Managing Director Adil Moosa speaking during a staff awards ceremony on Tuesday said the company had to dip into its reserve to arrange USD131 million for the GMR payout.
Such a massive loss from its reserve would understandably prompt the company to re-think and re-evaluate cost cutting plans, Adil explained.
However, he was quick to reassure that the cost cutting plans would not affect staff salaries and allowances.
Adil also insisted the payout would not adversely impact the ongoing USD800 million airport expansion project.
"The massive payout also shows this company's strength. This is something we must be really proud of," Adil added.
GMR row
The dispute stems from a 25-year contract to modernize, expand and operate the Maldives’ main international airport that the government entered into with GMR Male International Airport Pvt. Ltd. in 2010.
The mega project worth over USD500 million was awarded to GMR during the tenure of former President Mohamed Nasheed, despite concerns by the then opposition.
Shortly after the controversial resignation of Nasheed, the government kicked out GMR and cancelled its lucrative contract to run the airport.
The government has maintained that the contract was invalid in November 2012 after the parties fell into dispute over a fee GMR imposed on departing passengers, which the government said was contrary to Maldivian law.
The tribunal however, had ruled the original concession agreement was valid and binding and that the Maldives government had unlawfully repudiated it.
