Fenaka Corporation, the state-owned utility company, has announced it will not renew the contracts of 900 employees in 40 islands. These employees, hired for now-completed construction projects, are part of a larger group of 1,800 whose contracts had expired.

Muaz Mohamed Rasheed, the new Managing Director of Fenaka, confirmed to local media that the decision aligns with the company’s strategy to focus on essential personnel. He clarified that no staff involved in ongoing operations were affected. 

This move comes amid reports of Fenaka’s significant financial troubles, with debts amounting to MVR 4.1 billion, including MVR 3.2 billion owed to suppliers and over MVR 900 million in loans.

However, this decision has incited controversy in the Parliament. Members of the Maldivian Democratic Party (MDP), the majority party in Parliament, have expressed strong disapproval. They allege that these layoffs are politically motivated, aimed at replacing staff with pro-government individuals in light of the upcoming parliamentary elections.

MPs Hussain Mohamed Didi and Ahmed Raaee, among others, criticised the layoffs, suggesting they reflect political retribution against employees hired during the previous MDP government. Raaee went as far as threatening to withhold approval for incoming cabinet ministers as a form of protest against these actions. Ahmed Haleem, another MP, echoed similar sentiments, expressing reluctance to approve cabinet members if the layoffs continue.

These layoffs and the ensuing political fallout underscore the complex interplay between state-run enterprises and politics in the Maldives. Fenaka, largest employer among state-owned enterprises, particularly under former President Ibrahim Mohamed Solih’s administration, has faced scrutiny for allegedly hiring political activists.

The situation highlights the challenges in balancing financial prudence with political neutrality, especially in a state-owned entity like Fenaka Corporation, where strategic decisions can have far-reaching political implications.