The move by the Maldives to terminate GMR Infrastructure’s 25-year contract to own and operate the Male International Airport is a “totally economic decision” that is crucial to its survival, according to Ahmed Adeeb Abdul Gafoor, Minister of Tourism, Arts and Culture of the Maldives.

In a telephone interview to The Hindu from Male, Mr. Gafoor said: “The terms of the contract are not positive. We believe that this airport is a strategic asset for the government, and we cannot accept a situation where we have to pay someone to run it.”

Holding that there was no concession agreement in the world with a $25 Airport Development Charge, he said tourism was growing and the government would have to pay GMR for every extra tourist arriving in Male. “This year, we have paid them $7 million and with tourist arrivals growing, next year we may have to pay them $8 million. This is not sustainable.”

A million tourists visited the Maldives this year, and Mr. Gafoor expects the number to go up to five million in the 25 years that the GMR concession will run.

Explaining the context of the termination, he said privatisation of the only international airport in the country ought to have been done with Parliament’s approval instead of being an executive decision. The airport had to be accessible and cheap for airlines as it was critical for tourism, the mainstay of the island nation’s economy.

Referring to the contract as “lopsided,” Mr. Gafoor said it gave revenues only to the investor (GMR) and not to the government. “This deal is similar to the Delhi airport contract with GMR, but the government there got a better deal with a 45 per cent share of the revenues. We get only 1 per cent here.”

Mr. Gafoor stressed repeatedly at different points during the conversation that the decision had nothing to do with India politically.

“We have no issue with India, which is our closest friend. This is a company-to-company (Maldives Airport Company-GMR) issue and [it] will be resolved. India is our big brother, and I’m sure will understand.”

He sought to underline the fact that the Maldives had no problem with GMR but only with the process followed for the contract. “We are not hostile to GMR and have no issue with the company,” he said. The “real culprit of the deal is the previous government.”

Redemption of bonds

Asked whether his government was prepared to compensate GMR for the termination, he said it should be decided in court. “If GMR can prove its investments and it is validated by an independent party, we will bear it,” he said, pointing out that only on Monday did his government redeem $50 million of its bonds held by State Bank of India.

“The bonds fell due, and we asked for a roll-over but the Indian government said it was not possible and we redeemed them.” The Maldives government appears determined to regain control over the airport when the deadline ends on December 7.

Asked what its options were if GMR dug its heels in, Mr. Gafoor said: “We’ve requested them and we believe there will be a smooth transition. They are a professional company, and I believe they will respect us.” What if GMR offers a compromise, agreeing to renegotiate the contract on terms more favourable to the Maldives?

“Time has gone beyond that. Even our President had asked them several times in the last few months for a discount on fuel prices, but they did not agree.”

Asked whether this meant he was ruling out a compromise, the Minister retorted with a categorical “Yes, this is best resolved through arbitration.”