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Dredging works in Giraavaru Falhu lagoon. (Photo/HDC)

Govt moves to cancel CMCC dredging contract over payment dispute

The AG’s Office is currently assessing how to proceed with the cancellation while limiting further financial exposure to the state.

15 July 2025
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The government has initiated the process of cancelling its contract with Capital Marine and Civil Construction (CMCC) for the dredging of Phase 3 of Hulhumalé and the Giraavaru Falhu lagoon. The matter has been forwarded to the Attorney General’s Office.

Two state-owned enterprises—Fund Management Corporation and Housing Development Corporation (HDC)—awarded dredging contracts to CMCC for land reclamation projects in Hulhumalé Phase 3 and Giraavaru Falhu. Fund Management Corporation was contracted for the dredging of 160 hectares at Giraavaru Falhu, while HDC was responsible for 63 hectares at Hulhumalé Phase 3.

Minister of Housing Dr Abdulla Muththalib stated that CMCC had begun demanding payments for each phase of work completed after receiving an advance. He said the government decided to terminate the contract to avoid incurring further financial loss.

According to the minister, the contractor was paid an initial advance of USD 20 million (approximately MVR 308 million). An additional USD 15 million (MVR 231 million) was later paid to continue the project. However, the contractor subsequently stopped work and demanded more funds, which the government did not agree to pay.

“The firm was demanding to be paid in proportion to the work done. We believe they completed work worth USD 20 million. Although USD 35 million has already been paid, they refused to proceed further,” Dr Muththalib said.

As the agreement was signed between a government company and the contractor, the decision to terminate the contract required the involvement of the Attorney General’s Office. The AG’s Office is currently assessing how to proceed with the cancellation while limiting further financial exposure to the state.

The dredging project forms part of the ‘Binveriya’ housing scheme initiated by the previous administration, under which 2,000 land plots were planned from the Giraavaru Falhu lagoon. Of these, 1,347 plots have already been allocated. Additionally, Hulhumalé Phase 3 is expected to provide 1,000 more plots.

The current government has proposed expanding the land area to allocate more plots and housing units than previously planned.

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