From: ACI World Communications [mailto:jroach@aci.mmsend.

com] On Behalf Of ACI World Communications Sent: Wednesday, May 08, 2013 8:07 PM To: Subject: Male Airport Concession Dispute

8 May 2013 Dear Members, Given the thrust of privatizations across the globe, you may have been following the developments around the Male Airport, Maldives through press reports for some time now. While not taking sides with respect to the decisions that have been made by the various parties, we thought it would be useful to Members to have information about the situation. Background In October 2009, the Government of Maldives commissioned the International Finance Corporation (IFC), a member of the World Bank group, to conduct a competitive bidding process for privatization of Male International Airport. IFC carried out the bidding process with the engagement of several international consulting firms, including Ernst & Young, Halcrow, and Gide Loyrette Novel. The 25-year concession was to modernize and operate the airport, including building a new terminal by 2014. Six global consortia participated in the bidding: viz., Reliance - ASS, GVK Zurich Airports, Aeroport de Paris (ADP), Turkish Airports (TAV), Vienna - SNC Lavalin and GMR - Malaysian Airports Holding Berhad (MAHB). The GMR-MAHB consortium won the bid and signed the Concession Agreement on 28 June 2010 with Maldives Airport Company Limited (MACL) and the Government of Maldives, offering a combination of upfront fees of USD 78 million and revenue share on future revenues. The Agreement was subsequently novated from the GMR-MAHB consortium to the special purpose company of GMR Male International Airport Limited (GMIAL). Further information on the privatization process can be found on the IFC website: http://www1.ifc.org/wps/wcm/connect/b7a19900498390b882ccd2336b93d75f/SuccessStories_MaleAirport.pdf?MOD=AJPERES. Pursuant to the bid documents and the Concession Agreement, GMIAL was entitled to levy and collect USD25 as an Airport Development Charge (ADC) and USD2 as an Insurance Surcharge from every departing international passenger as of January 2012. However in December 2011, the Civil Court of Maldives ruled that neither of these charges could be collected unless the relevant law is amended by the Parliament of Maldives. In response, to honour the Concession Agreement, the then Government of Maldives allowed GMIAL to set off the loss of the proceeds against the concession fee payable to the Government, until such time as the amendment could be approved in Parliament. In February 2012, there was a leadership change in the Government of Maldives. The new government revoked the permission to set off the losses and, ultimately, GMIAL referred the matter to an arbitration tribunal in Singapore constituted by the parties in accordance with provisions of the

Concession Agreement. However, the Government of Maldives passed an order on 27 November 2012 terming the contractual arrangement as void ab-initio and providing to take back the airport effective 8 December 2012. The matter of wrongful takeover of the airport was contested with the result that the Singapore Supreme Court ruled that while the Government of Maldives had the right to expropriate the airport, this was subject to offering sufficient compensation pursuant to the Concession Agreement. However, On 8 December MACL/Government of Maldives took over the possession and control of the airport without payment of compensation to GMIAL. Status Currently, the matter of the Male Airport takeover by the Government of Maldives is undergoing international arbitration which is expected to last nine to twelve months. Further, since, pursuant to the financing arrangement, the Government of Maldives is guarantor to the lenders, and payments have not been made within the required time frames, lenders are proceeding with a separate arbitration against MACL / Government of Maldives for recovery. The next general elections in the Maldives are scheduled in second half of calendar year 2013 and it is possible that any leadership changes arising out of elections can have a material impact on the future of the Male Airport and the decision of expropriation. In the meantime, it is understood that the Government is in the process of transferring the Male Airport to a wholly-owned subsidiary of MACL and may explore a sale of equity in this entity to another airport operator. ACI members are advised to conduct due diligence while considering any investment in Maldives, considering the latest developments, uncertainty of outcome of elections, the legal and financial risks of the current arbitration and the nascent legal framework.

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