Dec. 8 (Bloomberg) -- The Maldives took control of Male international airport from India’s GMR Infrastructure Ltd. last night after a court allowed the island-nation to take over the facility following the cancellation of a contract.
The state-owned Maldives Airport Co. has taken over the operations of the Ibrahim Nassir International Airport and the transfer process has “gone smoothly,” Mohamed Ibrahim, managing director of Maldives Airport said today by phone.
The airport operator will separately fight compensation claims made by GMR in a Singapore court, the designated arbitrator, Ibrahim said. Losing control of the Male facility is a set back for billionaire G.M. Rao whose foray into airport business about six years ago helped boost his company’s sales eight-fold.
Maldives Airports is liable to pay GMR and its lenders more than $700 million in compensation, Sidharath Kapur, chief financial officer of airports business at the Bangalore-based company, said Dec. 5.
GMR will facilitate a smooth takeover of the airport and will take steps to work out the compensation receivable from the Maldives government, the company said in a statement. It will take a month for GMR staff to oversee the transfer, Ibrahim said in a phone interview.
GMR dropped 3 percent to 19.20 rupees in Mumbai trading yesterday. The stock has fallen 9 percent this year, compared with a 31 percent gain in the S&P CNX 500 Index.
The Maldives government will conduct a forensic audit to determine the financial involvement of GMR during the time it was running the airport, President Mohamed Waheed said in an e-mail interview with India’s Business Standard newspaper today.
A Singapore court on Thursday allowed Maldives to take over the airport after a contract with GMR was canceled Nov. 27. Maldives may have to compensate GMR in accordance with the agreement between them, according to a decision handed out by three judges led by Chief Justice Sundaresh Menon.
The Male facility accounts for 20 percent of GMR’s airport business revenue, according to CFO Kapur. As many as 2.7 million passengers used the facility in the year ended March 31, according to the annual report of GMR, which had the contract to operate the airfield for 25 years. The company and its partners also run the Sabiha Gokcen International Airport in Istanbul.
The project was awarded to GMR, which also operates India’s biggest airport in New Delhi, and Malaysia Airports Holdings Bhd. in 2010 by then-President Mohamed Nasheed, who was ousted in February. Malaysia Airports held 23 percent of GMR Male International Airport Pvt.
The contract never received the necessary approval from parliament and was signed under “dubious circumstances,” according to Masood Imad, a spokesman for President Waheed, who took power after Nasheed resigned.
The Maldives, a group of 1,190 coral islands with a population of about 400,000 people, is located southwest of India. About 198 of the islands, spread across 900 kilometers 559 miles), are inhabited.
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