If managed well, Male Airport can make money: Masood Imad

The GMR Infrastructure stock got knocked when the Maldives government took back the Male Airport from the company. Yesterday, Masood Imad, media secretary at President's Office Male told CNBC-TV18 that the Singapore Court of Appeal has ruled that the Maldives government has the authority to take back the airport from GMR.

Today, he confirmed that it was not an interim order, but in fact a ‘fait accompli’ issued by the Surpeme Court of Singapore. He further added that there is no other court of appeal on this issue.

"The Male Airport is a good milking cow. It has a potential to make lots of money, provided it is managed well," said Imad.

Below is the edited transcript of his interview on CNBC-TV18.

Q: What is the next step now? You have got an interim stay, do you have to argue your case in the Singapore court and only then an actual decision will be known?

A: This is not an interim stay. This is a ‘fait accompli’ issued by the Supreme Court of Singapore. There is no other court of appeal on this issue. The Singapore court has ruled that Maldives can take back the airport from GMR. We are going ahead as we planned.

We already had discussions with GMR. A team of GMR officials and our officials sat down yesterday to work out the seamless handing over of the operation. We have agreed that we would keep all the staff of GMR, even all the Indians who wish to stay and continue working under the same conditions as they were working with GMR. They will continue to perform in their present positions. I perceive this as a transfer of books.

Q: What is the compensation that you are paying GMR?

A: On the issue of compensation; having issued termination notice, we did proactively engage on this issue. We have filed arbitration case in the court, in Singapore to determine what the compensation would be, in view of the fact that we initiated a termination notice. I rest it to the court in Singapore, to determine how much the compensation Maldives Airports Company Limited (MACL) would have to pay GMR and we will insist that MACL stick to the rulings of the court

Q: There are couples of media reports indicating that the compensation level that GMR could possibly need at this point is up to USD 700 million. Any preliminary discussions that you have had, which are not formalized at this point in time in terms of a ballpark figure?

A: I do not want to speculate on numbers at this time. As you said there are lots of figures that are coming out of the press and most of them are baseless or have no real legal meaning to it. There are different figures mentioned, I really do not know.

Q: When we can we get a formidable timeline by when you could possibly decide the compensation?

A: I think it is incumbent on the court. When the court decides then there is nothing that we have to say about it.

Q: There is no controversy on one figure that is USD 350 million which Axis Bank had loaned to the company and which bears the sovereign guarantee of the Maldives government. Is it very clear that Axis will get back that money and by when?

A: I want to assure everybody that Maldives will not do anything out of the extraordinary or norm. If somebody has loaned the money then I think it is only fair and its only to be gentlemanly, that you payback the money, since the airport has been taken back. What more can I say. The court will decide whether it is USD 350 million or USD 350 million plus interest or minus interest. I do not know.

Q: Is the airport making that much by way of free cash flows to be able to pay back this loan amount?

A: I think airport is a good milking cow. The airport has a potential to make lots of money, provided it is managed well and the finances are handled properly.

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Q: Going forward are you going to put the Male Airport up for bidding again or is it just going to be handled by local agencies or the government?

A: For the moment we transfer it to Maldives Airports Company Limited, that’s a company that owns the airport. I believe government has other plans; maybe they will take back the thing, and sit down and discuss a way forward. But as soon as government decides, I will definitely keep the Indian media informed.

Q: You wouldn’t have the number as to what exactly are the free cash flows of the Male Airport?

A: No, I do not have.

Q: Would you be able to enlighten us on what is the Indian government’s position on this whole thing? Have you received any letter from the Indian government expressing their displeasure over the event?

A: I do not have any indication of any letter that we have received from the Indian government on this issue. We have made it very clear that this is a business-to-business (B2B) business and it’s not a government-to-business (G2B) or business-to-government (B2G) business. The government has sent some clear messages. They said that they want us to exhaust all legal avenues before we made a decision and we did so. We went to the court, they went to the court, and we went to the court again.

The Supreme Court in Singapore has decided that the Maldives can take back the airport and so we took back the airport. The process of taking back is happening now. The GMR officials and the Maldivian officials are in discussion to work out the nitty-gritty of handing over the operations.

Q: We were given to understand that the Indian government may not continue with the aid that it gives to Maldives. Have you heard anything, even if not in writing, have you heard anything t to that effect?

A: I am only on media. I do not have anything over and beyond that. I have not had any information that the Indian government has said so to this government.

Q: A quick word on the reasons for the move because now that the matter is not sub judice any more, was it just the airport development charge, which was the key point of contention or could you just highlight what was other points which you were unhappy with to take such a move?

A: The airport development charge (ADC) was a sticking point because it was legally not possible. Having said that to deduct ADC from the concession fees was bleeding the Male International Airport Company. So Male International Airport Company had basically to pay GMR, to keep GMR operating the company.

Again, there were serious concerns in the manner in which the was awarding had happened and there is a criminal charge that has been filed by the current Male International Airport, in the police to investigate, to look into the matter; the events that led to the awarding of the contract to GMR. That shows a very shady picture of the events that led to the handing over or signing of the contract with GMR.

Q: Why wasn’t there any room for renegotiation as opposed to straight cancellation?

A: I do not want to make a comment at this stage. I will wait for the police to publicly announce their findings.

Q: Are the criminal charges only pressed against Maldives government officials or are there any criminal charges against the company as well?

A: I believe that it will have to the company officials who sat down with GMR to sign it because there are some evidence coming out that there have been appropriations and authorizations that were issued by individuals, without authorizations and following through the due process. I do not see this as a concern so much so for GMR. I feel that GMR has been victimized by the former government into this messy situation that was not legally sustainable.