As the Maldives' Government is looking into reforming SOEs that continue to depend heavily on the Government, RACL became one of the companies that needed major changes, leading to the Government deciding to merge the company with the Maldives Airports Company Limited.
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One of the most important initiatives towards reducing the state expenditure that was started by the current administration led by President Dr Mohamed Muizzu is the work towards reforming State Owned Enterprises (SOEs). Although SOEs play a crucial role in the Maldives’ economy, providing essential services for all of its citizens, a majority of the SOEs in the Maldives continue to heavily rely on the Government when it comes to finances. With this, the Government has had to bear a huge financial burden in order to keep these SOEs up and running, which has brought a magnitude of challenges during a time when the Maldivian economy is faced with a major debt crisis.
This led to the Government taking a closer look at the heavy dependency of SOEs on the Government and planning out several reform tactics which included not only dissolving some SOEs but also merging a few in order to address and tackle the root problems when it came to these enterprises. One such company that heavily depends on the Government is the Regional Airports Company Limited (RACL), which was established on the 30th of September 2020 by former President Ibrahim Mohamed Solih to operate the aerodromes and manage the airport functions efficiently in a sustainable manner. Although RACL tackles the important function of overseeing 6 airports, including H. Dh. Hanimaadhoo airport, H. Dh. kulhudhufushi Airport, Sh. Funadhoo Airport, HA. Hoarafushi Airport, G.Dh. Maavarulu Airport, and Gn. Fuvahmulah Airport, the company continues to run heavily depending on the state budget.
In 2023 alone, RACL faced losses of MVR 95 million and a loss of MVR 24 million was also recorded in the first quarter of 2024 alone - showcasing a downward trajectory for the company and its finances. This has made RACL one of the SOEs that continues to rely heavily on the state budget, leading to the Government having to provide RACL with a total of MVR 90 million as a capital injection in 2024 alone. With the Government looking into reforming such SOEs that continue to depend so heavily on the Government, RACL became one of the companies that needed major changes, leading to the Government taking the decision to merge the company with the Maldives Airports Company Limited (MACL) which carried out a similar function on a border level.
Although the merging of the two companies was announced in September of 2024, it appears that the merger is finally going to take place this year as the Managing Director of MACl, Ibrahim Shareef has announced that MACL and RACL will be merged within January 2025. According to Shareef, valuations are currently being done, and with the work expected to be completed soon all the staff at RACL head office are expected to be transferred to the MACL office building in Hulhumale’ to complete the merging process.
While the final work of the merger is still underway as the Ministry of Finance is set to decide the model on which the company will operate following the merger, this reform is expected to bring much-needed ease to the state budget as the newly merged company is expected to be more financially sustainable and efficient in its operations. By consolidating resources, reducing administrative redundancies, and streamlining operations, the merger is anticipated to significantly lower the financial burdens on the state budget.
