ibnlive » India

Nov 28, 2012 at 04:40pm IST

Maldives rules out reviving airport deal with GMR, India slams decision

New Delhi: A diplomatic row is brewing between India and Maldives over the termination of the Male airport contract. The Maldivian government has ruled out reviving the $500 million deal with GMR and justified the scrapping by saying it was done purely on legal grounds.

The Maldives Attorney General has indicated to CNN-IBN that the contract was scrapped after it was found to be void. India has called the move a bad message for foreign investors while GMR has termed the cancellation as unlawful and is planning to take legal action against the Maldivian government. The $500 million project had been awarded during the tenure of former president Mohamed Nasheed, who was ousted in a coup in February 2012. The airport project had been in limbo following the regime change.

Speaking to CNN-IBN, Maldivian Attorney General Aishath Azima Shakoor said it was impossible to carry on with the contract. "The contract was terminated purely on legal grounds. We came to the conclusion that it's a void contract. It will be impossible to carry on with the contract," she said.

Maldives rules out reviving airport deal with GMR

India has called the move a bad message for foreign investors while GMR has termed the cancellation as unlawful.

However, Arun Bhagat, EVP and Group Head, Corporate Communications, GMR, termed it unlawful. "We won the bid fair and square. It's been two years since we've been operating the airport. We've modernised the existing airport which is good for the country, the number of passengers are also up. We are paying higher revenue share to the country which is again good for them because they can fund many programmes for the citizens of Maldives. Somebody's really got to tell me what's wrong with what we've done here. We are going through the letter in detail and obviously we'll seek legal remedy," he said.

Sources say that India had advance knowledge of the Maldives Cabinet decision to scrap the agreement. External Affairs Minister Salman Khurshid had called up Maldivian foreign minister on Tuesday, expressing concern about the move. Khurshid described the scrapping of the contract as an incorrect decision which should be reconsidered. Reports say that Khurshid also told him that India saw it as a move which could impinge on ties.

The Maldivian foreign minister replied that the agreement was being scrapped on legal and economic grounds. He stressed that Indian government should not see it as an act hostile to the bilateral relationship. Three phone conversations took place between the two foreign ministers on the issue. Khurshid is also expected to speak to Maldives President Mohammed Waheed Hassan as well. Sources say that India will extend support to GMR on the issue.