Mauritius will have to pay damages of Rs 1.8 billion to Indian company Patel Engineering over a matter before an international arbitration tribunal.
On February 12, 2015, Finance Minister Vishnu Lutchmeenaraidoo, surrounded by Housing Minister Showkutally Soodhun and Good Governance Minister Roshi Bhadain, who were then in office, announced to the press the termination “without any negotiation” of the contract with Indian company Patel Engineering.
It was a 99-year lease for 58 acres in Les Salines, Port Louis, granted in 2008 for the Neotown project, in exchange for an annual rent of Rs 15 million.
Showkutally Soodhun had specified that “if we need to compensate the company for its investments, which would amount to Rs 250 million, the government will do so. But let them prove it.”
Nine years later, give or take a month, the government finds itself, following an international arbitration decision, condemned to pay compensation of over Rs 1.8 billion, in addition to penalties and interest, the exact amount of which has yet to be determined.
At the time, the government relied on article 14(c) of the lease to terminate the contract “in the public interest.”
The stated intention was that this land was needed to develop the Grande-Rivière port in Baie-du-Tombeau, within 15 years, to make Port Louis “one of the most modern ports in the region,” Vishnu Lutchmeenaraidoo had said. The terms of the lease were apparently not favourable to the government.
Indian company Patel Engineering has won a partial final award from an international arbitral tribunal in a case against the Mauritian government.
The tribunal ruled in favour of Patel Engineering, stating that the government wrongfully terminated and expropriated the land lease held by the company’s subsidiary in Mauritius.
The award amounts to Rs1.35 billion (equivalent to $40.225 million in February 2015), plus interest at the PLIBOR rate + 2% until payment. The decision on costs is still pending.
And it goes on to specify that “subject to any recourse against the decision and enforcement proceedings, after deducting the costs of financing the arbitration proceedings and legal proceedings, the company will be entitled to the remaining amount awarded.”
At the current exchange rate, USD 40.225 million is equivalent to Rs 1.8 billion and some.
The PLIBOR rate mentioned by Kavita Sanjiv Shirvaikar is the Port Louis Interbank Offered Rate, which is based on the contribution rates of member banks of the Port Louis Automated Clearing House. Currently, the PLIBOR rate is 3.49%.
According to Rajesh Bhagwan, General Secretary of the MMM, this is “another blow” to the population.
“When decisions are made hastily out of political vengeance, as was also the case with Betamax, these are the consequences. The population is taking note,” he said.
Source: Defi Media
