Companies & Sectors
GMR seeks $1.4-billion compensation from Maldives for termination of airport deal

The airport project contract awarded to GMR for modernising and operating the Ibrahim Nasir International Airport, signed in 2010 during the previous regime of Mohamed Nasheed, was ‘unilaterally’ terminated by the current government on 27th November last year

Indian infrastructure major GMR today sought a compensation of $1.4 billion from Maldives for the “wrongful termination” of its 25-year contract to develop and operate the Male International Airport.

 

The claim was today filed before an Arbitration Court in Singapore and a final order in the matter is likely to come out by end of March next year.

 

The figure of $1.4 billion was reached after taking into account loss of profit, payments made to sub-contractors besides others.

 

Sources said the arbitration process will go on and the Maldivian government along with the Maldivian Airport Company, both parties in the suit, will give their responses.

 

The over $500 million airport project contract awarded to GMR for modernising and operating the Ibrahim Nasir International Airport (INIA), signed in 2010 during the previous regime of Mohamed Nasheed, was ‘unilaterally’ terminated by the current government on 27th November last year.

 

The airport was taken over by the Maldives Airports Company after a high-voltage legal tussle in which GMR had initially got a stay order on the termination from the Singapore High Court.

 

However, the Singapore Supreme Court ruled on 6th November, a day before the notice period expired, that Maldives has the power to take over the airport on 6th November.

 

The abrupt termination of the contract had raised tempers between India and Maldives which had till then said it will go for an amicable solution to the airport issue.

 

Various political parties, all coalition members of the current regime headed by president Mohamed Waheed, had carried out a series of protests and campaigns against the Indian company.

 

The Maldivian government’s stand was that the contract was terminated because it was “void ab initio” (invalid from the outset) and hence the government does not have to bear any compensation for the termination.

 

Earlier this week, Maldives’ anti-graft watchdog had ruled out any corruption in the leasing of the international airport to GMR.

 

However, the government had said, “The report does not change the government stand that the contract given by former president Mohamed Nasheed was illegal.

 

“The contract was not terminated on the ground that there was corruption but because it was done against the law of the land.”

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Govt approves pass through for coal import; power rates to rise

“There will be small increase in power tariff. It will be very marginal increase on unit cost of power depending upon the cost of import of coal,” finance minister Chidambaram said

Electricity tariff across the country will increase by a minimum 15 to 17 paise per unit after the government today allowed power producers to pass on higher cost of imported coal to consumers.

 

Finance minister P Chidambaram said the Cabinet Committee on Economic Affairs (CCEA) has approved the pass through proposal, which would result increase in power tariff.

 

“There will be small increase in power tariff. It will be very marginal increase on unit cost of power depending upon the cost of import of coal,” Chidambaram informed the media.

 

“They (IPPs) can import coal themselves if they wish, otherwise Coal India will import and this additional price which we pay for imported coal, obviously, has to be pass through in the power tariff,” he added.

 

Chidambaram said: “It is better to have power and pay a few paise more or not have power at all. It is better to have our power plants working and producing power or keep them shut down after investing thousands of crores. For every MW today, I think the capital cost is between Rs5-Rs6 crore.”

 

A coal ministry official said the move would result in higher power tariff to consumers.

 

“Though the quantum of the coal to be imported has not been worked out but as per estimates if Coal India imports 15% of coal, it would result in increase in electricity tariff by 15 paise to 17 paise per unit,” the official said.

 

Chidambaram further said the government has initiated measures to augment production and “by first week of July certain other decisions will be taken to open up more coal mines and to produce more coal”.

 

In the meanwhile, coal imports were necessary, he added.

 

“In the interim period, there is no option but to import some coal. Imported coal is costlier than domestic coal. We are guaranteeing 65% this year to 75% by the end of 12th Plan (by Coal India) for each of these 78,000 MW capacity,” he said.

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Government approves 5% stake sale in Neyveli Lignite

The Cabinet Committee on Economic Affairs (CCEA) has cleared 5% stake sale of Neyveli Lignite through an offer for sale so that the company can meet the SEBI deadline on public shareholding

The government today approved the government’s 5% stake sale in Neyveli Lignite (NLC), which would help garner around Rs466 crore to the exchequer at current market price.

 

“The Cabinet Committee on Economic Affairs (CCEA) has cleared 5% stake sale of Neyveli Lignite through an offer for sale,” sources said.

 

Department of Disinvestment (DoD) had moved Cabinet seeking sale of over 7.8 crore shares, or 5%, through an offer for sale (OFS) route in the Tamil Nadu-based miner.

 

The CCEA had earlier this month deferred a decision of stake sale in NLC.

 

Tamil Nadu chief minister Jayalalithaa had last month written to prime minister Manmohan Singh, opposing disinvestment in the integrated mining-cum-power generating company.

 

She had said divestment in the company would lead to labour unrest and disruption of power supply from Neyveli.

 

The disinvestment department had communicated to the CCEA that there is no other option but to divest the stake in the company as it is the only way to make the company compliant with the minimum public shareholding norm.

 

The Securities and Exchange Board of India (SEBI) has set a deadline of August 2013 for all listed central public sector units to have a minimum 10% public shareholding.

 

Jayalalithaa had suggested delisting of Neyveli Lignite or amending the Securities Contracts (Regulation) Rules, 1957, to make a special exemption for the company from the minimum public shareholding rule.

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COMMENTS

arun adalja

4 years ago

another victim of psu share and if you have sell out as it will be available 20% down in ofs than current mkt price.

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