Maldives: Malé International Airport
In June 2010, IFC advised the government of Maldives on the country’s first successful public-private partnership project:
the structuring and awarding of a 25-year concession for Malé International Airport. The transaction is a flagship deal for
the privatization program of the new democratically elected government and is already being used as a model for launching a full-scale public-private partnership program.
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In June 2010, IFC advised the government of Maldives on the country’s first successful public-private partnership project:
the structuring and awarding of a 25-year concession for Malé International Airport. The transaction is a flagship deal for
the privatization program of the new democratically elected government and is already being used as a model for launching a full-scale public-private partnership program.
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The concession was awarded to a consortium of GMR Infrastructure Limited (GMR,
India) and Malaysia Airports Holdings Berhad (MAHB, Malaysia). The consortium will
pay $78 million in upfront fees and offered a percentage of shared revenues that
represents over $1 billion in fiscal benefits for the government over the length of the
concession, calculated on a net present value (NPV) basis. The proposed investment
of $400 million represents nearly 40 percent of the country’s gross domestic product
(GDP).
The advisory work was supported by AusAid (Australia), the Ministry of Foreign Affairs of the Netherlands, and DevCo. DevCo is a multi-donor program affiliated with the Private Infrastructure Development Group and funded by the UK’s Department for International Development, the Ministry of Foreign Affairs of the Netherlands, the Swedish International Development Agency, and the Austrian Development Agency.
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The advisory work was supported by AusAid (Australia), the Ministry of Foreign Affairs of the Netherlands, and DevCo. DevCo is a multi-donor program affiliated with the Private Infrastructure Development Group and funded by the UK’s Department for International Development, the Ministry of Foreign Affairs of the Netherlands, the Swedish International Development Agency, and the Austrian Development Agency.
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Background
Malé International Airport opened for operations in November 1981, replacing a runway that had been built on a strip of cleared land in the middle of Hulhulé Island, about 2.8 km from the capital city of Malé. Since then, nearly 80 percent of air traffic to the Maldives passes through the airport, which provides scheduled services to outlying islands. The airport has a unique intermodal transport system that allows passengers to connect between international and domestic flights—including seaplanes that provide connections with island resorts scattered throughout the Maldivian archipelago—as well as motor boats.
The growth of the airport was constrained due to the lack of available land and financing to increase the capacity of the terminal capacity as well as to ensure compliance with international safety standards, and by the limited access to international best management practices. Consequently, the government sought a private sector partner that would help it expand and rehabilitate the airport. This decision was part of a broader strategy to liberalize air transport policies, improve the competitiveness of Maldives’ airports, and provide the necessary boost to the economy, 80 percent of which is dependent on tourism.
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Malé International Airport opened for operations in November 1981, replacing a runway that had been built on a strip of cleared land in the middle of Hulhulé Island, about 2.8 km from the capital city of Malé. Since then, nearly 80 percent of air traffic to the Maldives passes through the airport, which provides scheduled services to outlying islands. The airport has a unique intermodal transport system that allows passengers to connect between international and domestic flights—including seaplanes that provide connections with island resorts scattered throughout the Maldivian archipelago—as well as motor boats.
The growth of the airport was constrained due to the lack of available land and financing to increase the capacity of the terminal capacity as well as to ensure compliance with international safety standards, and by the limited access to international best management practices. Consequently, the government sought a private sector partner that would help it expand and rehabilitate the airport. This decision was part of a broader strategy to liberalize air transport policies, improve the competitiveness of Maldives’ airports, and provide the necessary boost to the economy, 80 percent of which is dependent on tourism.
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IFc’s role
The government appointed IFC as its lead adviser to structure and implement a balanced transaction. Key objectives were to:
The government appointed IFC as its lead adviser to structure and implement a balanced transaction. Key objectives were to:
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increase the airport’s capacity to handle long-term traffic
growth while ensuring that the airport met international tech-
nical standards;
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position the airport as a world-class facility catering to high-
end tourism;
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improve operations and service quality standards in line with
international best practices;
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maximize the value of the project for the government in terms
of proceeds and quality;
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implement a successful public-private partnership which could serve as model for other infrastructure projects.-----------------------------------------------------------------------------------------------------------------------------------------------
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Transaction StructureThe government’s prior attempts to privatize the publicly owned airport company (Maldives Airport Company Limited, which also operated the Malé airport) had been unsuccessful, so IFC organized an international bidding process in a way that would ensure the selection of a reputable consortium capable of delivering such a project.Each bidder was required to demonstrate that it had the requisite experience in developing, designing, constructing, operating, and financing airports of a similar size. The technical solutions proposed by the bidders were also expected to consider the specific conditions on Hulhulé Island, including its physical and environmental constraints, and the coordination required between conventional aviation activities, seaplanes, and motor boats.he cornerstone of the project was the construction of a new passenger terminal expected to meet LEED silver criteria and to be carbon- neutral—i.e., to minimize energy consumption and carbon emissions through the use of energy-efficiency and renewable-energy technologies, and minimize water consumption. The bidders were also asked to make specific, predefined improvements to the existing airport infrastructure, and to manage all core airport services, including the provision of fuel—a historically established role at Malé airport.
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BiddingSix bidders were prequalified for the transaction, comprising more than ten international investors. Three bids were ultimately received. Financial bids were evaluated based on the payment of an upfront fee as well as annual concession fees as a percentage of gross revenues to the government. The bidder with the highest financial bid evaluated on an NPV basis would be awarded the concession.The GMR-MAHB consortium won the bid by offering upfront fees of $78 million and a concession fee averaging more than $1 billion in fiscal resources (on an NPV basis) over the lifetime of the concession.------------------------------------
Post-Tender results• The government received a considerable upfront fee for the concession contract.• The project is expected to generate over $400 million in foreign investment and lead to the creation of thou- sands of jobs.• The new Malé airport will be compliant with interna- tional norms, and the facilities will be environment- friendly.• A better functioning airport will help support the de- velopment of the country’s tourism industry and lead to economic growth.COURTESY : IFC ( for Information)
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