GMR sticks to $1.4 bln claim for Male contract termination

With a legal tussle on between the Maldivian government and GMR over termination of a contract to develop Male international airport, the Indian infrastructure firm on Friday said it stood by its compensation claim of $1.4 billion.

The two sides are currently in arbitration before the Singapore Court of Appeal and preliminary proceedings have begun last week.

GMR's reaction came after a Maldivian media report quoted President Yameen Abdul Gayyoom as saying that his government would have to pay compensation to the Indian company "at any cost".

"We believe that the government will have to pay compensation to GMR at any cost. We're trying to get the sum that we have to pay lowered –- we're trying to get it reduced to a more plausible sum," Maldivian news portal 'Haveeru Online' quoted the President as saying.

In 2012, the over $500 million airport development project was unilaterally scrapped by the then Maldivian government headed by President Mohamed Waheed. The case had

then gone for arbitration at the Singapore Court of Appeal. Under the contract signed in 2010, GMR was to modernise and operate the airport for 25 years.

In the report, Gayoom was also quoted as saying that the contract with GMR was signed by a sovereign government and therefore, Maldives will have to pay the compensation. The statement came before the Maldivian President departed Male for the Maldives Investment Forum 2014 in Singapore.

This is the first time that the Maldives government has acknowledged that compensation has to be paid to GMR, company officials here said, but described the termination of the contract as "wrongful".

They said their claim was that "the forceful takeover of the airport by the Maldives government amounts to repudiation of a valid contract and therefore damages, including loss of future profits, has to be paid. Thus, GMR's claim is $1.4 billion."