Govt relaxes cross-subsidy policy; allows island handover on $1m payment

Government has further relaxed the policy of cross-subsidy projects that provide islands or lagoons to those who fund projects, allowing islands or lagoons to be handed over to the investor after payment of at least $1 million from the project funds. 

Earlier, under the policy, the government used to give an island or land or lagoon only after receiving the total project funds. But now, the policy has been changed so that an investor can be given an island, land or lagoon by paying at least $1 million out of the total amount allocated for the project.

The tourism ministry said investors would get 60 days to pay the balance. In case the project funds are not received within that period, the government can cancel the lease agreement with the investor.

As per the new amendment, which came into effect on Wednesday, the state will not have to pay anything as compensation for the island, land or lagoon allotted to the investor at the time of cancellation of the lease agreement due to unpaid balance payment. The initial payment will also be forfeited. 

Tourism ministry had early this month announced six islands to be allotted to private individuals in lieu of cross-subsidy or developmental projects.

Agreements are being signed to provide uninhabited islands in return to companies that provide financing for the construction of airports across the country.

In December, the planning ministry had announced that the minimum amount to be offered by those interested in developing airports would be $5 million. However, due to poor response to the announcement, the ministry re-announced the minimum offer price at $3 million and published it in February.