Nine years, three presidents and US$ 1 billion later: the Maldives airport saga explained
Quintupling capacity could be a game changer.
Artwork: Dosain
04 Aug, 5:49 PM
The Velana International Airport's sprawling new terminal finally opened on July 26. But it was only a partial opening – rushed to coincide with Independence Day – with the national carrier Maldivian shifting operations from the old terminal. All 34 airlines serving the Maldives are expected to complete the transition by September 2025.
The terminal is six years behind schedule and at least US$ 100 million above budget, making this the country's most expensive and complex infrastructure saga.
Why is the new terminal so important?
It's expected to eliminate what the IMF called a critical "supply-side bottleneck" that has been a chokepoint constraining tourism growth. It could help sustain five percent annual GDP growth momentum over the medium-term, make the Maldives more competitive against rival destinations and exponentially boost tourist arrivals by attracting new airlines and spurring the stalled development of new properties.
The new terminal can handle 7.5 million passengers annually – five times the old capacity.
The old terminal was designed for just 1.5 million passengers annually. But it was handling over four million travellers, serving "12,000 passengers from a facility which is built to cater for 3,000," as an airport official described it.
As Condé Nast Traveller Middle East noted: "The Maldives' main airport has long lagged behind the luxurious experience promised by the archipelago's picture-perfect resorts" - whereas the new terminal "reflects the high-end experience the Maldives is known for."
The old facility was dubbed "the Achilles' heel of the Maldivian travel experience" with "congestion, remote bus gates, and operational bottlenecks," as well as "cramped arrival halls packed with jostling crowds and clamouring hotel reps waving signs."
At the new terminal, a dozen jet bridges replaces the sweltering bus rides and automated baggage systems dramatically reduces wait times. According to Condé Nast: "Queues are shorter, transfers smoother, and the entire flow from plane to speedboat or seaplane has been streamlined."
So what will the actual passenger experience be like?
At the old terminal, visitors were "funnelled through an ageing building opened more than 50 years ago to serve a fraction of today's traveller count."
The 78,000 square metre new terminal has 47 check-in counters, 20 immigration desks, 12 aerobridges, and six departure gates. The automated baggage system can process 3,000 bags per hour with real-time tracking. It has 41 elevators, 14 escalators, and four travellators.
Why did it take so long?
Syndicate funding, contractor troubles and a global pandemic.
The complexity of coordinating financing from four different Arab development funds (Saudi, Kuwait, Abu Dhabi, and OPEC) created persistent payment delays. Some financiers refused to release lump sums to prevent misuse, which slowed everything down. There were also significant disagreements between the different agencies.
The Saudi Binladin Group was awarded the terminal in May 2016 for a reported cost of US$ 350 million with a completion target of late 2019. At the time, the contractor was dealing with over US$ 30 billion in debt after laying off nearly 70,000 workers. The actual construction was subcontracted to the China Harbour Engineering Company.
How much did it cost?
The loans taken to finance the terminal construction amounted to US$ 457 million:
2016 (Original funding round):
Kuwait Fund: US$ 50 million
Saudi Fund: US$ 100 million
OPEC Fund: US$ 50 million
2017:
Abu Dhabi Fund: US$ 50 million
2021 (President Solih's administration):
Kuwait Fund: US$ 50 million
2024 (President Muizzu's administration):
Saudi Fund: US $100 million
Abu Dhabi Fund: US$ 40 million
2025:
Saudi Fund: US$ 17 million
Total: $457 million
Saudi Arabia was the biggest contributor.
According to the Maldives Airport Company Ltd's audited 2024 financial statements, US$ 430.5 million had been spent on the terminal by end of 2024. The audit also showed:
Provision of electricity to new development areas: MVR 320 million (U$ 21 million)
Other related projects: MVR 837 million (US$ 54 million)
Capital advances for development: MVR 367 million (US$ 24 million)
MACL's total borrowings reached MVR 13.42 billion (US$ 870 million) by the end of 2024, up from MVR 11.92 billion in 2023. Borrowing costs of MVR 141 million (US$ 9.2 million) were capitalised on the terminal project during 2024. The report flagged this as a "key audit matter" because these infrastructure projects now represent 59 percent of MACL's total assets.
Other airport expansion loans included US$ 47 million from the China Development Bank for seaplane facilities and more than US$ 100 million worth of loans from the Bank of Maldives.
The new terminal was almost financed entirely through debt that MACL will be repaying for decades. Whether this represents value for money depends on whether the economic benefits can justify nearly half a billion dollars in cost.
What was all the political drama about?
There's been a three-way blame game between the incumbent President Dr Mohamed Muizzu, the opposition Maldivian Democratic Party, and former president Abdulla Yameen. Everyone wants credit for completing the terminal, and they're all pointing fingers about who caused the delays and cost overruns.
Let's start with the GMR controversy - what happened there?
This goes back to 2012. The government terminated a US$ 511 million airport development deal with the Indian infrastructure giant after just two years. The MDP claims this cost the economy US$ 60 billion because GMR would have completed a new terminal by 2014 at no cost to taxpayers.
GMR took over airport operations in mid-2010 under a 25-year concession. When the developer was abruptly evicted in December 2012, 25 percent of refurbishments had been completed and 87 percent of land reclamation for the new terminal was done.
As the loans taken for airport development now account for a large portion of the country's debt burden, the MDP chairman argues that it has "closed off the opportunity to raise finances to fulfil other essential needs of the Maldivian people."
The government initially earned more revenue than before under GMR. But the civil court ruled in December 2011 that GMR's Airport Development Charge was illegal and the government ended up paying GMR more than it collected as concession fees.
Who was behind the GMR termination?
Yameen is happy to take full credit. He claims to have forced the cancellation as the majority leader in 2012 when president Dr Mohamed Waheed – whose small party lacked any seats in parliament – was dependent on the ruling coalition's majority.
Yameen defended the decision on sovereignty grounds. He said there was "no lack of patriotic leaders who didn't want to become enslaved, give away our main doorway to a foreign party."
The termination cost an arbitration payout of US$ 271 million, but Yameen maintains that it was worth it to protect national security.
What happened after GMR left?
When Yameen became president in November 2013, he found partially completed terminal infrastructure sitting rusting on 60 hectares of reclaimed land. But his administration decided to completely start over.
The terminal contract with the Binladin Group was part of a larger expansion project that also involved the development of a Code F runway, fuel farm and cargo complex for more than US$ 370 million from the Chinese Exim Bank.
What does the current government say?
President Muizzu acknowledges that previous administrations deserve "due credit" but says they only completed the visible exterior work or 54 percent of the project.
Speaking at the terminal opening ceremony, MACL Managing Director Ibrahim Shareef claimed that 70 percent of the work had been completed under the Muizzu administration since November 2023. Unfinished components included a 12 megawatt electricity system, water and sewerage, duty-free shops, and the head-of-stand access road leading to the front of an aircraft parking spot.
What does the opposition say?
The former finance minister provided specific completion percentages and claimed that 71 percent of all "critical" work was already finished when the government changed:
Concrete: 100 percent complete
Steel structure: 97 percent complete
Roof: 100 percent complete
Facade: 89 percent complete
HVTS systems: 90 percent complete
The previous administration left mainly non-critical tasks like ticketing software, he said.
How did Covid affect things?
The pandemic delayed material lead times from two to four weeks to 12 to 16 weeks. The Chinese subcontractor faced severe operational challenges due to the country's restrictions. International travel limits made it hard to get skilled labour. Construction costs increased by nearly 39 percent over pre-pandemic levels.
How many times did the terminal completion date change?
Six times across different administrations:
Original (2016): Late 2019
Post-delays (Solih administration): May 2022 and December 2023
Muizzu's campaign promise: September 2024
First Muizzu revision: July 2025
Second Muizzu revision: October 2025
Actual opening: July 2025 (partial)
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