PPM MPs’ fuel supplier wins lawsuit against ports company

PPM MPs’ fuel supplier wins lawsuit against ports company
December 20 14:25 2016

The civil court has ruled in favour of a company linked to ruling party lawmaker Riyaz Rasheed in a dispute with the Maldives Ports Limited over a fuel supply contract.

In a judgment delivered Monday, the civil court ruled that MPL was buying diesel from other suppliers in breach of its contract with Meridiam Services and ordered the state-owned company to abide by an agreement signed in April 2016.

The civil court previously issued a temporary order compelling MPL to buy diesel exclusively from Meridiam Services for vehicles and vessels used in Malé’s commercial port.

The order was granted pending a judgment in Meridiam’s lawsuit against MPL alleging breach of contract after the ports company began buying diesel from other suppliers.

The MPL had appealed the temporary order but the civil court delivered its final judgment yesterday before the high court ruled on the appeal.

MPL CEO Mohamed Junaidh told the press in the wake of the order issued last October that the company stopped buying diesel from Meridiam due to suspected fraud and financial losses.

Meridiam Services had been billing for 160,000 litres a month despite MPL’s vehicles needing only 60,000 litres, resulting in a loss of MVR1.2 million (US$78,000) every month, he said.

Junaidh told Sun Online last night that MPL will appeal the civil court’s judgment at the high court. He insisted that the agreement with Meridiam is invalid.

Meridiam said in its lawsuit that it won a competitive bid to supply fuel to MPL. But Junaid previously explained that the bid was won in April 2015 and the agreement was renewed a year later without bidding.

While the agreement with Meridiam stipulates that prices must be lowered in line with global oil price changes, Junaidh said the company continued to supply diesel at MVR12 per litre, which was higher than the current market rate.

Other companies have offered to sell diesel for MVR7 per litre, he said.

But MP Riyaz Rasheed, who has reportedly transferred his shares in Meridiam to his children, dismissed Junaidh’s claims as “lies” and threatened to sue MPL.

Meridiam will also sue media outlets that covered the MPL press conference, the deputy leader of the ruling Progressive Party of Maldives’ parliamentary group said.

Meridiam was reportedly under investigation by the anti-corruption watchdog in February over a deal with the state-owned Fenaka Corporation.

The fuel supplier is also locked in litigation with the state wholesaler. In early October, the State Trading Organisation appealed a civil court ruling in favour of Meridiam to recover MVR19.3 million (US$1.2 million) released as a credit facility.

The STO claims that Meridiam failed to pay for fuel released on credit from March to December 2010 along with fines imposed for non-payment. But the civil court ruled in June that STO was unable to produce original documents to prove that the fuel was ever released to Meridiam.

The appeal is ongoing at the high court.