Maldives abandons India port deal, signs MoU with Chinese firm for Thilafushi Port

Synopsis

The Maldives has abandoned its port development agreement with India. A new memorandum was signed with a Chinese company for the Thilafushi Port project. This move raises concerns about China's growing influence in the region. The Maldivian economy faces significant challenges and projected growth decline this year. India has previously undertaken major infrastructure projects benefiting the island nation.

New Delhi: The Maldives has reneged on its commitment to jointly develop the Thilafushi Port with India, signing a memorandum of understanding (MoU) with a Chinese company for development of the first phase of the project. The development has triggered alarm bells in the strategic community as it can boost China's presence in India's southern neighbourhood.

Maldives Ports Limited recently signed an MoU with China Harbour Engineering Company (CHEC), awarding the port project on a single nomination basis even as CHEC has a patchy track record. Besides Sri Lanka's Hambantota Port, CHEC has been involved in ports in South America, Kenya and the Pacific, and has been infamous for financial and project mismanagement, according to people familiar with the matter.

CHEC and its parent company, CCCC, have been involved in the Guyana Airport Project, the Naivasha Inland Container Depot in Kenya and the Nauru Port Redevelopment project, among others.

A strategic affairs expert said on condition of anonymity that CHEC has a record of delivering projects that have created governance, fiscal, environmental, political and strategic risks.

The decision to engage CHEC at a time when the Maldivian economy is in a precarious position, accentuated by the West Asian conflict, has also raised eyebrows. The Maldives' current account deficit and fiscal deficit are projected to increase substantially this year while gross domestic product growth is expected to dip below 1% compared to 6% last year.

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In 2024, during the Maldives President Mohamed Muizzu's India visit, the two sides had announced plans to jointly develop the Thilafushi Port to decongest the Male Port.

The island nation's decision to renege on its commitment to India comes shortly after Muizzu lauded India's role in the Greater Male Connectivity Project (GMCP), which links Male with the industrial hub of Thilafushi. GMCP is the largest infrastructure project undertaken in the Maldives.

India has undertaken several infrastructure projects in the Maldives over the past eight years, benefiting several thousand Maldivians.