Will GMR exit Male Airport after Maldives cancels contract

Moneycontrol Bureau

GMR Infra may contemplate a legal action against the Maldives government terminated a 25-year contract to develop Male Airport. This was the second international project which GMR had undertaken after Sabiha Gokcen airport in Istanbul.

According to the duly signed concession agreement, the Maldives government will have to re-imburse GMR in case there is any termination.

Though, GMR officials have not yet talked about the compensation amount, insiders say, it will be much higher than the actual cost of the project. The Maldives government will have to take into account expected revenues and interest cost while compensating the company.

GMR catered to over six lakh passengers in the preceding quarter and earned Rs 3043 million from operations at the airport. In fact, GMR has in the past said that the project is a profitable venture, unlike Delhi Airport which is yet to break-even. Male Airport made Rs 440 million profit in the September quarter.

The USD 500 million project is 70% debt funded and the interest cost for the September quarter was Rs 49 million.

After taking over the project, GMR had to fight it out with the new government that came to power in February this year when key government ministers alleged widespread corruption in the airport privatization-- a charge denied by the previous administration as well as GMR.

It also had a tough time with local politicians who were averse to the non-aero development of the airport like duty free shops and related activities. GMR is also fighting a court case for collecting USD 25 per passenger toward airport development charges.