Maldives secures US$373m loan for airport development

Maldives secures US$373m loan for airport development
December 29 14:15 2015

The government has secured a US$373 million concessionary loan from the Chinese EXIM Bank to upgrade and develop the Ibrahim Nasir International Airport.

Tourism Minister Moosa Zameer signed the “preferential buyer credit loan agreement” yesterday during his ongoing official visit to China. The funds will be used to build a new 3.2 kilometre runway, reclaim land, and develop a fuel farm and a cargo complex.

Zameer told reporters before departing for China earlier this week that the runway project has been awarded to the Chinese Beijing Urban Construction Group. Construction work is expected to begin next month.

Zameer said Airbus A380 jet liners will be able to land at INIA after the runway expansion.  “The existing runway will be changed to a taxiway,” he said.

The EXIM Bank loan has to be repaid in 20 years with a five-year grace period, Zameer told local media after signing the loan agreement.

In February this year, Economic Development Minister Mohamed Saeed said that INIA’s capacity would increase threefold with the development of a new runway along with a new terminal. The development of the airport terminal was awarded to Japanese Taisei Corporation and is to be financed by the Japanese Bank for International Cooperation.

China is meanwhile funding other infrastructure projects in the Maldives with grant aid and concessionary loans, including the Malé-Hulhulé bridge – a key campaign pledge of President Abdulla Yameen. The Chinese CCCC Second Harbour Engineering Company is set to begin work on constructing the US$200 million bridge next month.

In June this year, Yameen declared that Sino-Maldives relations are at an “all-time high” with the establishment of a cooperative partnership between the countries last year.

Following the historic visit of Chinese President Xi Jinping, the Maldives also agreed to become a partner in China’s maritime silk route and became a founding member of the Chinese-led Asian Infrastructure Development Bank.

Negotiations are also underway for a China-Maldives free trade agreement.

The government has meanwhile assured neighbouring India that closer ties with its Asian rival should not be a cause for concern.

During a farewell call by outgoing Indian High Commissioner Rajiv Shahare yesterday, Yameen said India has been the Maldives’ “closest partner in terms of diplomatic and political relations.”

India-Maldives relations had soured in 2012 after the government’s abrupt termination of an agreement with Indian infrastructure giant GMR to develop the international airport. The Indian government subsequently tightened visa requirements for Maldivians and revoked a special quota for the import of aggregate and river sand.

A Singaporean arbitration tribunal is meanwhile due to determine the amount of compensation to be paid to the GMR-led consortium. The tribunal ruled last year that the previous government had “wrongfully” terminated a “valid and binding” concession agreement.

GMR is seeking US$803 million as compensation, but the government says the payout is likely to be US$300 million.

India had lifted the restrictions after Yameen assumed power in November 2013 in the wake of prolonged political turmoil.

But former President Mohamed Nasheed’s imprisonment in March appeared to strain relations with Prime Minister Narendra Modi dropping the Maldives off his Indian Ocean tour in March.

In a sign of improving ties, Indian External Affairs Minister Sushma Swaraj visited the Maldives in early October and revived a Maldives-India joint commission after a 15-year hiatus. Both sides committed to broadening cooperation in the defence, human resource, trade and health sectors.

Yameen had previously said that his administration is “looking east” for development partners as economic cooperation with China does not involve the same challenges to remaining an Islamic state posed by “Western colonial powers.”