Thursday, December 6, 2012

UPDATE 2-Court rules for Maldives in airport dispute with India's GMR

* GMR Infra shares down 3.5 pct after court decision

* Maldives plans to take over airport at midnight on Friday

* Airport project island nation's largest foreign investment

(Adds comments from president's spokesman, background)

SINGAPORE/COLOMBO, Dec 6 (Reuters) - A Singapore court ruled

in Maldives' favour on Thursday in the South Asian island

nation's move to cancel a $511 million airport development

contract with India's GMR Infrastructure, clearing the

way for it to take over the airport.

The ruling comes after an order won on Monday by GMR that

had suspended the government's decision to cancel the contract,

although the Maldives had still been pressing ahead with plans

to take over the airport.

"The Maldives government has the power to do what it wants,

including expropriating the airport," Sundaresh Menon, the Chief

Justice of Singapore, said in court.

Shares in GMR Infrastructure were down as much as 4.2

percent following the ruling after earlier being in positive

territory on the day. It later pared some of those losses.

A GMR spokesman declined immediate comment.

"We will take over. We will enroll all those people from GMR

who wish to join. Those who don't can go home. By Friday

midnight we will take over," Imad Masood, the Maldives

president's media spokesman, told Reuters, adding that the

Maldives would pay compensation to GMR.

The two sides have not yet agreed on terms of compensation.

The standoff over the project threatens to cloud foreign

investor sentiment towards Maldives, which is seeking overseas

cash for many of its tourism projects. The country terminated an

agreement with GMR last week, rattling its relations with India.

The government of the Maldives, a tropical island chain

south-west of India famous for its luxury beach resorts popular

with honeymooners and scuba divers, cancelled the 2010

agreement, the largest foreign investment in the country, saying

that it was not valid.

The cancellation follows a year of political turmoil that

saw the ousting of its former president and months of unrest.

The contract to upgrade and operate the airport and build a

new terminal came after a global tender overseen by the World

Bank and signed under former president Mohamed Nasheed's

administration.

The project was implemented through a joint venture company

comprising GMR Infrastructure Limited and Malaysia Airports

Holding Berhad.

However, Nasheed's rivals filed legal action saying the

contract was invalid as it contained a $25 airport development

charge per outgoing passenger which was not authorised by

parliament.

(Additional reporting by Kaustubh Kulkarni in MUMBAI; Writing

by Tony Munroe; Editing by Muralikumar Anantharaman and Jonathan

Thatcher)

Source: http://news.yahoo.com/1-singapore-court-rules-maldives-airport-dispute-084548351--sector.html

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