GMR-Maldives row: Where the dispute lies

GMR

In June 2010, the Maldives government, the Maldives Airports Company Limited (MACL) and GMR-MAHB Consortium signed a tripartite concession agreement to develop and run the Ibrahim Nasir International Airport at Malé, the capital of the island nation. The process of privatisation of the Malé International Airport was conceptualised and implemented with MACL, being a 100% owned company of the government of Maldives, assuming the role of Grantor while the government remains as the Guarantor.

The Maldives government in 2009 asked the International Financial Corporation (IFC), the private sector arm of World Bank, to manage the bid process for privatisation of the airport to ensure fairness. IFC ran the bidding process in 10 months.

IFC in turn engaged a number of globally reputed consulting firms like E&Y, Halcrow, Gide Loyrette Novel and others to be involved at various stages. The bidding process itself was a typical three-stage process. In the stage of request for proposal, the bid was evaluated on three parameters — legal, technical and financial.

The last was the critical issue where the current dispute lies. To go back to the bidding process then, in the first two stages — legal and technical — there was only pass or fail criteria. Once the bidders qualified from these stages, the criteria for final selection of the winner was based on their financial bids. To evaluate the financial bids, a set formula was given to all the bidders after discussions between the privatisation committee and IFC. The formula was based on the Net Present Value of the revenue (in US Dollars) the bidders will pay to the Maldives government. In other words, the key was who would pay the maximum revenue share to the nation.

Six consortiums — GMR+MAHB, Reliance +ASA, Zurich+GVK, ADPe, TAV, Vienna+SNC Lavlin — were pre-qualified to participate in the bidding process. Three bidders — GMR+MAHB, Zurich + GVK and TAV+ADPe — submitted the bids from whom the final bidder was chosen.

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