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News Archives - January 2009
Six Days To Surrender Handhufushi: MTDC
The public-owned Maldives Tourism Development Corporation (MTDC) has given Yacht Tours six days to hand over Handhufushi Resort or face legal action.
The warning follows a 30-day notice period issued to Yacht Tours after the company failed to pay this quarter’s rent for the resort.
Abdullah Jabir, the chairman of Yacht Tours, has said his company withheld the rent because the MTDC had failed to fulfil its contractual obligations, chiefly, the construction of a waterway in the resort.
Yacht Tours filed a case two days ago to sue the MTDC for US$67 million – the projected loss of revenue if their 20-year contract for Handhufushi Resort is terminated by MTDC.
Bone of contention
Jabir has accused MTDC of not “honouring its part of the deal”, which included the creation of channel between the islands of Herethere and Hulhudhoo.
Speaking at a press conference on Tuesday, he said the construction of the waterway had not been completed.
Both the unfinished channel and the presence of machinery, he continued, had adversely affected the occupancy level of the resort which had led to a huge financial loss.
In addition, Yacht Tours had spent US$22 million on making the necessary improvements to the resort, including the creation of a new beach, landscaping and seaweed removal.
But according to Ahmed Shareef, one of the MTDC’s directors, the agreement stated the waterway would be completed by 30 November 2008 and this had been achieved.
“We have completed building the channel by this date. Now the banks are being done.”
He added the presence of vehicles and equipment was also due to other work being carried out on the island by the same contractor.
The negotiating table
Failure to reach an amicable agreement, said Jabir, had forced him to turn to the courts to resolve the matter. But, he said, he was still open to negotiation.
Previously, Jabir had asked the MTDC for a rent decrease to compensate for the incomplete waterway and to offset the effects of the global economic crisis.
He had also offered to buy the resort from the MTDC in order to make the money spent on improvements a worthwhile investment.
Jabir added the decision made by the board of directors on Monday was contrary to government policy.
President Mohamed Nasheed recently decided to allow resorts still under development to defer rent payments for a year because of the international financial meltdown.
Mohamed Zuhair, press secretary at the president’s office, has said the president will do “everything to alleviate” the dispute between Yacht Tours and the MTDC.
He added Nasheed was “addressing the larger issue of 67 resorts being developed” in order to help those facing financial difficulties.
“It’s nothing personal”
But Mohamed Mihad, managing director of MTDC, has said the corporation is not willing to negotiate as sufficient notice to pay the rent had already been given to Yacht Tours.
He added Yacht Tours would forfeit the US$10 million bank guarantee provided to secure their bid for the resort.
According to Mihad, the guarantee was obtained during the bidding process to safeguard the interests of the MTDC.
Another of the board members, Ibrahim Saleem, said the company had held a board meeting on Tuesday and had agreed not to extend the notice period.
“It’s nothing personal,” he said. “Herethere Resort (Handhufushi Resort) is the only one of our ventures that is currently generating money, so we can’t afford to lose it.
“We negotiated and gave them 30 days to pay the outstanding rent. But today we have given them six days notice to hand the island back. It is in the interest of shareholders.”
The MTDC was established as a public enterprise with 55 per cent of its shares sold to the public to encourage the redistribution of tourist profits.
At present, it is developing 8 resorts as joint ventures and one, Uligamu, is a solo project.
The future for Addu
The opening of Handhufushi Resort, previously called Herethera, in 2007 was seen as a boon to Addu Atoll which was widely viewed as economically neglected by the government.
It promised to boost the local economy with hundreds of jobs guaranteed for locals.
In recent months, employees at the resort have gone on strike in order to protest against non-payment of wages by Yacht Tours. Ibrahim Rasheed, general manager at the resort, has denied these claims.
At the press conference, Jabir said the MTDC had orchestrated the protests and rejected rumours that disgruntled Adduans were planning to occupy the island on Friday, saying, he had “the best interest of Adduans at heart”.
Mihad has ensured staff will not be affected by the dispute. MTDC board member Ahmed Shareef added, “Nothing will be affected, none of the staff jobs or the bookings. Everything will go smoothly. Think of this only as a change of management.”
The lawyer for MTDC has said the company would now bring in auditors to evaluate the buildings and the equipment. “If Yacht Tours does not hand over,” he said, “we will take action according to the law.”
Source: Minivannews
