ADC of $25 should not be deducted from concession fee: Managing Director of MACL

Managing Director of Maldives Airports Company Limited (MACL) Mohamed Ibrahim has said today that Airport Development Charge (ADC) of $25 should not be deducted from concession fee by GMR.

Following Civil Court ruling that departing passengers cannot be charged $25 as ADC, former government agreed with GMR, as GMR proposed, that this amount can be deducted from the concession fee paid to the government.

Mohamed Ibrahim, who was also the MD of MACL back then, said today that it is not acceptable that part of the investment cost is deducted from the amount owed by GMR to the government, as the purpose of leasing the airport to a foreign company is to establish a good infrastructure and increase government profits.

“I cannot accept the agreement that followed the Civil Court ruling; that is, to deduct this amount from the concession fee GMR owes to Airports Company,” said Mohamed Ibrahim.

“There are two reasons for long-term lease of a place like the airport to a foreign company. First is if we don’t have the money to invest in building a sound infrastructure. Second is to increase government gains. These two purposes must be fulfilled if the airport is to be leased. Profit must increase. But that will not be the case if the investments made on the airport are deducted from what is owed to the government,” said Mohamed.

He said that he is not against the $25 charge, but this must be done after thorough investigation how much is invested.

“In principle, it is not a problem to charge a fee. Several countries charge ADC. Whether it is charged before the development or after it – it must be carefully calculated,” said Mohamed.

Concession fee must be paid to the government once every three months and once a year. Concession fee of $1.5 must be paid yearly, and variable concession fee must be paid once every three month out of revenue from fuel and other services.

Former government had agreed to deduct $25 as well as $3 insurance charge, from concession fee owed to the government.

An estimate by Finance Ministry revealed that the deduction of $25 will result in a monthly loss of about $3 million to the government.

Mohamed Ibrahim said that if the number of tourists arriving in Maldives increases and $25 is deducted from concession fee, MACL faces the threat of not making profit.

“This matter could not be discussed in our Board meetings earlier. And now the Board is not complete so the matter cannot be discussed. We haven’t found a solution to this problem. It’s a huge loss to this company,” Mohamed said.

The government estimates $33 million as revenue from the airport at the end of this year. GMR estimates about $2 million monthly, which results in $24 per year.