During pressing times such as the current one, it is spirituality that keeps GMR Group Chairman G M Rao going. While investors and analysts have reacted negatively to the news that GMR lost its airport project in the Maldives, Rao says it has given him humility and a good experience which will help him in future international projects.
While sharing an account of his journey from a trader to a successful entrepreneur with around 1,600 delegates, including emerging entrepreneurs, private equity and venture capital investors at TiECON 2012 in Chennai, Rao said that he had faced many adversities, but learnt from them and adapted to the change.
“It (the Maldivian issue) gives a lot of experience and we will participate wherever there is a transparent bidding. This project was made a success story by International Finance Corporation (IFC).” Rao said that this is one of the positive attitudes that helped the group which started with Rs 3 lakh to grow to a Rs 65,000-crore group.
The Maldivian government had recently decided to terminate GMR’s airport project. The Maldivian Airport Company Limited (MACL), upon the Maldivian government's instructions, terminated the contract on November 27. The project was given to GMR in 2010 during the previous regime of former president Mohamed Nasheed.
Asked whether the company will seek Indian government’s support to get help in the Maldives, Rao said, “Don’t know and cannot comment.”
GMR moved the Singapore High Court against the Maldivian government’s decision. According to the project contract, in case of any differences between parties, the law of either Singapore or the UK would apply. The Singapore High Court has granted injunctive relief against the termination of the contract.
However, Maldives hardened its stand and said that its termination decision was “non -reversible and non-negotiable” and said no such injunction can be issued against a sovereign state.
“Fighting with a sovereign state has given a different experience. Whatever the message we get out from this issue, we will see that we will not repeat it,” said Rao.
The Male airport venture has been the most profitable for GMR in terms of its airports business division, which has developed four airports including Hyderabad and Delhi in India. The Bangalore-based company has so far invested about $250 million in managing and upgrading the facilities at the Male airport.
While cancelling GMR-led consortium's $511-million contract last week to run the Male international airport, the Maldivian government asked it to hand over the control of the airport within seven days.
According to reports, the bone of contention between GMR and Maldivian government is the levy of airport development charge (ADC) of $25 per passenger and insurance surcharge of $2 per passenger. The levy was supposed to be charged from January 1, 2012 but a local civil court had struck down the proposal in December 2011.
After that, the then government in the Maldives headed by Nasheed agreed to compensate GMR against the levy. However, the decision was reversed by the new regime early this year, leading to GMR’s filing for arbitration in a Singapore court.
GMR claims that it has dues to the tune of $3 million on the Maldivian government. To resolve the issue, the company had also offered to exempt all Maldivians from the levy and instead charge $28 per passenger on all foreigners. This, too, has not yet been accepted by the Maldives government, according to reports.