Auditor General’s Office Disclosures Expose MACL’s USD 114M Reclamation Liabilities and Subsidiary Conduit

Financial statement audits published by the Auditor General’s Office have laid bare a complex, multi-billion-rufiyaa financial maneuver involving state airport operator Maldives Airports Company Limited (MACL), detailing how the state enterprise assumed hundreds of millions of dollars in stalled reclamation commitments through newly incorporated corporate vehicles.

The audit disclosures reveal that MACL entered into an MVR 1.76 billion (USD 114 million) settlement agreement to compensate contractor Capital Marine and Civil Construction (CMC) for dredging and reclamation works across Hulhumalé Phase 3, Giraavarufalhu, and Thilafushi.

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The transactions were executed under strict confidentiality between the government, Housing Development Corporation (HDC), and Maldives Fund Management Corporation (MFMC). Prior to the publication of the financial statement audits by the Auditor General’s Office, no state entity had publicly accounted for how the national airport operator assumed financial ownership of these municipal and industrial reclamation projects. 

While MACL’s liabilities surged by billions of rufiyaa without immediate operational cash flows, audit notes indicate that compensation was structured through land allocations from HDC and MFMC, though neither the exact acreage, precise boundaries, nor formal transfer timelines were detailed.

The restructuring stemmed from contractor CMC abruptly halting dredging operations after accumulating unpaid bills and encountering mounting uncertainty over cost recovery mechanisms under its original contracts with HDC and MFMC.

In response, MACL incorporated a dedicated subsidiary, Marine and Integrated Infrastructure Development Private Limited (MIID), on 18 September 2025. On 7 October 2025, the participating parties executed a formal Deed of Novation, legally assigning and transferring CMC’s accrued liabilities, rights, and executed works to MIID.

Classified in the Auditor General’s published audit filings as an acquisition of assets under construction, the novation recognized MVR 323.8 million (USD 21 million) paid to CMC by the end of 2025 for past works. The remaining liability of MVR 1.43 billion (USD 93 million) was scheduled for settlement across the 2026 financial year.

Compounding the scale of the airport operator’s financial exposure, the audited financial statements of another wholly owned offshoot, Peninsula Infrastructure Private Limited, incorporated on 8 October 2025 to carry out dredging, sand mining, reclamation, and civil engineering, reveal the rapid movement of more than a billion rufiyaa across state balance sheets.

According to Note 2.6.1 of Peninsula’s financial statements, the company incurred MVR 1,051,863,065 (approximately USD 68.2 million) in land reclamation and infrastructure development expenditures on behalf of MACL. Following a formal directive from the Ministry of Finance and Planning dated 27 September 2026, the entire sum was removed from Peninsula’s books and recognized as Capital Work-in-Progress directly on MACL’s balance sheet. Peninsula subsequently applied the MVR 1.05 billion against payables owed to MACL, extinguishing the intra-group liability without carrying the capitalized physical asset forward.

Peninsula’s standalone balance sheet also indicates total assets of MVR 115.5 million, consisting entirely of other receivables due from MACL for services and expenditures incurred on the parent company’s behalf. Conversely, Peninsula recorded current liabilities of MVR 104.1 million, including MVR 68.3 million in unsecured, interest-free advances owed to state affiliate State Trading Organization PLC, alongside MVR 35.8 million in payables to contractors, primarily for bund wall construction.

With no commercial revenue and zero cash reserves at the close of 2025, Peninsula reported a net operating loss of MVR 30,840 from initial professional and legal setup fees, yielding a gearing ratio of 90 percent.

Auditors highlighted that Peninsula’s operational viability and status as a going concern rely entirely on continued financial backing from MACL. The parent company has issued formal commitments to meet Peninsula’s working capital requirements and confirmed it will not demand repayment of outstanding intra-group liabilities for at least 12 months from the authorization date of the statements.

The disclosures from the Auditor General’s Office publications underscore how major sovereign infrastructure debts and delayed dredging operations were consolidated under MACL’s corporate umbrella, effectively positioning the airport authority as the financial backstop for the capital region’s largest reclamation projects.