Hulhumale’ housing project, contracted to Indian company, National Buildings Construction Corporation (NBCC), to build 2000 housing units has seen rise in prices due to an amendment to an Indian law.
India’s Ministry of Finance had decided to levy a 15 percent duty on reinforcement and structural steel exported from the country after May of this year. Since the project to build the housing units in Hulhumale’ is being financed by India’s Exim bank, 75 percent of the materials and services required for the project has to come from India.
According to reliable sources, for the 2000 housing units, steel worth USD 16 million (MVR 246 million) has to be imported and with the levied duty of 15 percent, an additional USD 2.38 million (MVR 36.6 million) will be added to the project cost.
NBCC has subcontracted the project to two other Indian companies; Varindhera Constructions Limited and Renatus Projects Private Limited. Despite their pleas with the government, the Indian government has refused to forgo the duty levied on the subcontractors.
While senior officials of the Maldivian government hold interest at India’s Renatus Projects company, these parties had requested the Maldivian government to make a request with India to drop the duty. Now, the Maldives has officially requested for the levy to be lifted as an exception, however, the Indian government is yet to respond to the request.
NBCC is contracted to build 1400 units of three-bedroom apartments and 600 units of two-bedroom apartments. This project costs a total of USD 130 million; USD 110 million (MVR 1.69 billion) was loaned by Exim Bank of India. However, should the levy remain, the cost of the project will inevitably rise to USD 132.38 million.
The contract for the project was signed over on February 2, 2021. According to the agreement, the project must be completed within 900 days of contract, however, in light of the current timeline of the project, it is unlikely to be finished by deadline.