Saturday 24th Feb 2024
Dhivehi Edition
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Land reclamation

Draft agreement between GOM and Van Oord leaked

A draft agreement to hand over Giraavaru lagoon, to a foreign company without a bidding process has been leaked.
The government is planning to contract the Giraavaru lagoon reclamation project to Van Oord of the Netherlands. A senior government official shared copies of the draft agreement between the government of Maldives and Van Oord.
According to the draft agreement Van Oord will reclaim 100 hectares of land and 15 hectares will be given to Van Oord without any additional cost. The government plans to develop a residential city after reclaiming the lagoon.
Van Oord will be allowed to use 15% of the reclaimed land for commercial purposes. The 15-hectare lease of land that Van Oord gets will remain with the company forever. The MoU also states that once the development of Giraavaru lagoon is completed, the title of the land will have to be changed to the company without charging any additional fee.
The MoU between the government and Van Oord states that the government must give a sovereign guarantee to Van Oord so that they can acquire financing for the project. Van Oord's proposed cost of reclaiming 100 hectares of land and landing revetment from the Giravar lagoon is $69 million. During President Yameen's tenure, 245 hectares of land in Hulhumale' Phase 2 was reclaimed for a total of USD 50 million
Today, the government has changed the policy of issuing guarantees in a way that will benefit Van Oord. As per the new regulations a newly registered company is eligible to receive a sovereign guarantee from the government. In addition, the previous regulation stated that the interest rate of a loan should not be above 3.5 percent. However, the new regulation allows the government to issue guarantees to loans above that rate. The previous regulation also required personal guarantees from shareholders of the company. This clause was removed from the amended regulation.
The leaked agreement shows that the government has already decided to award the project to Van Oord even though the government announced the project just three days ago.