Adhadhu has learnt that the Maldives Airports Company Limited (MACL) began efforts to award a 25-year contract to Dubai-based Jetex to build and operate a jet terminal at Velana International Airport (VIA) on President Dr. Mohamed Muizzu’s orders.
Jetex's proposal was submitted to the MACL Board on May 29, 2024. Adhadhu has obtained the minutes of the meeting. The documents show that the process was initiated following a letter sent by the President's Office.
After consultation with Jetex, MACL Chief Commercial Officer (CCO) Mohamed Mihad submitted a document to the board meeting. It was prepared by Program Manager Fathimath Mohamed Saeed and was reviewed by Chief Financial Officer (CFO) Ahmed Asad Hashim. The paper was approved by the company's CEO and Managing Director Ibrahim Shareef.
The proposal to hand over the operation of the VIP terminal to Jetex was brought through business tycoon Mohamed Ali Janah. He has not denied the reports.
Although MACL has denied plans to hand over the VIP terminal to Jetex, it is clear that the company's senior management was aware of the deal pressed by the President's Office.
Janah and Nurain. -- Photo: President's Office
Reports about plans to hand over the terminal to Jetex surfaced after Janah's daughter Nurain was appointed Chairperson of MACL. Following criticism, MACL denied the reports.
However, the Jetex proposal has been sent and the MACL board has started discussions. Jetex had proposed to build and operate a Fixed Base Operation (FBO) terminal and asked MACL to provide the necessary apron space, as well as a permit to operate the lounge and ground handling services. The company has requested a total of 10,000 square feet of land.
At the MACL board meeting, Mihad said the new master plan includes two areas for the construction of the FBO terminal. They are 8,000 square feet of land east of the airport and the land where the Hulhule Island Hotel is located. He noted that 3,000 square feet of land adjacent to the eastern plot was vacant and could be given to Jetex.
A 3D image of the jet terminal.
Jetex proposal included lower revenue.
According to Jetex's proposal, the company will invest USD 25 million over 25 years. A fee of 55 percent of the revenue from ground handling and parking revenue will be paid to MACL every year. Despite the decline in profits, the minimum annual payment to MACL will not be less than USD 5 million.
According to the paper submitted to the MACL board, the USD 5 million is lower than the company's current jet handling revenue. In 2023, the service generated revenue of MVR 5.6 million. This figure doubles with the revenue from jet fuel.
Board members' concerns
The minutes show that board member Ibrahim Noordeen said that such a major agreement should come in accordance with the company's rules and regulations and with more transparency. He said the work of improving the quality of services at the airport and expanding business is important, but such a move should be open to other investors.
Responding to Noordeen, CFO Asad, who reviewed the Jetex paper, repeatedly said that this was done on the orders of the President's Office. After Assad, Mihad said the paper presented to the board was a proposal that could be justified from a business perspective.
Other board members, however, agreed that they did not consider it appropriate to discuss such a project with only one investor [Jetex] and to review only one proposal. Meanwhile, Asad, Mihad and Shareef defended the President's Office's order.
At the board meeting, Managing Director Shareef said this move would improve the service provided at VIA to the jets. Noting that jets are now landing at Noonu Maafaru airport, he expressed concern that if the VIA does not do this, the number of jets may decrease.
Noordeen also rejected Shareef's remarks regarding the Maafaru airport. He said the number of jets landing is not expected to change, as seaplane operations and domestic flights are operated by the VIA.
At the board meeting, directors Ibrahim Siyad Qasim and Sahar Waheed said it was not appropriate to consult with only Jetex and approve their proposal. They said such a move should be done in accordance with company policies and in a transparent manner.
Shareef said he had no intention of doing such a thing without the approval of the board. The meeting concluded by deciding to share the board's concerns with the President's Office.
Industry concern and predictions
The jet service industry began in the Maldives on the initiative of interested companies. There are about twenty such active companies. Their owners are also against giving the terminal to Jetex.
"This is not something to be discussed. MACL can invest USD 25 million. And if they want to hand over the VIP terminal, then they must open a bid," one owner stated.
The companies believe handing over the jet terminal to another company would bring losses to MACL, while local companies in the jet service industry are likely to face bankruptcy.
“Then we will have to get the service at the price given by Jetex and buy fuel,” a company owner said.
"And Jetex is not even a strong company."
Local companies believe that although the Jetex proposal is currently on hold, it will still be done.
"I believe that a JV will be formed to provide this service to Jetex. MACL can form a company," a businessman said.
Corruption
We must recall the plans to hand over VIA to GMR. It was done through a proper tender process. The government that came after former President Mohamed Nasheed said the GMR agreement was invalid. The agreement was cancelled and the country faced major financial losses.
This time, the government has tried to hand over the VIP terminal on a golden platter without a proper tender or bidding process. This is a major red flag.
This transaction involves so many aspects of corruption. This includes giving benefits to others when the benefit can be obtained by the state and attempting to award the project without bidding.
This article was first written in Dhivehi by Ahmed Aaidh.
