Part of the foundation works at the Lubowa International Specialized Hospital Uganda
The construction of the International Specialized Hospital Uganda in Lubowa is behind schedule after the developer indicated that it had been derailed by COVID-19, heavy rains and cash flow issues.
In 2019, Parliament guaranteed a 1.4 trillion Shillings loan to Finasi/ROKO led by Italian investor Enrica Pinetti for the construction of the 264-bed Specialized health care project. However soon after the approval, news emerged that the joint venture between Finasi and Roko had collapsed amidst reports that up to 240 billion Shillings had gone missing before the project kicked off.
While the Ministry of Health handed over the site on June 10, 2019, it hoped that the construction would be completed by June 2021. However, the project remains at the foundation level and, according to Health Minister Dr Jane Ruth Aceng, it has been extended for now 15 more months.
Aceng told the Health Committee of Parliament this afternoon that on February 10, 2020, the project owners Engineer George Otim revised the works program and approved an extension of three months because of bad weather conditions in the Lubowa area caused by high rainfall. Another extension of 12 months was sought in addition to the three months due to the effects of COVID-19 lockdown.
So far 406 Billion shillings in promissory notes have been issued. The value of work completed now stands at 204 billion representing 22.7 per cent of the total construction while the planned value which is the amount of work that should have been done by now if conditions were normal is at 305 billion. In terms of work progress, the work is late by 11.4 per cent, which stands at 102 billion shillings not yet paid to the contractor because work has not yet been done.
According to the project owners Engineer George Otim, the construction is at 35 per cent with some main activities already undertaken to completion. Otim said the heavy rains affected the construction work, especially because the area was dug and looked like a dam. He says the rains especially of 2020 July and August left them stranded.
Brian Luswata, the Legal Officer of the Lubowa project explained that because of the COVID-19 lockdown, workers were trapped abroad, shipments couldn’t move, while in Uganda they also had to struggle on how to keep their workers during the pandemic.
But Mbwatekawa Gaffa, the Kasambya County MP said that the COVID-19 and weather excuses do not hold, because the project was suspicious from the onset. He asked why other projects in the country have been moving on and not Lubowa.
During the meeting, it also emerged that the project was delayed by cash flow issues arising from the lender’s failure to purchase two guarantees due to the fact that the said promissory notes were not issued according to the agreed cash flow statement.
“The funding structure creates a very rigid link between the execution of works and pre-determined groups of milestones on one hand and funding on the other, which makes no room for any possible delay or disruptions or adjustments in the sequence of works,” Aceng said.
Aside from the two extensions, another delay was a standstill agreement signed, which meant that work would stop or utmost continue moderately between January and April 2021. This was still in relation to COVID-19 force majeure events. This period saw the project operations slow down and continue at a reduced pace up to April. Accordingly, the project will now be completed on June 09 2022.
Herbert Kinobere the Kibuku county MP questioned if when the team was signing the agreement, they did not anticipate any rains. He also said that looking at the trend of the things, the developer might have to come back to ask for more time. He says the project should revert back to Government.
The committee chairperson Micheal Bukenya said that as MPs they are shocked to hear of the developments, but emphasise that they now plan to meet Finasi and other stakeholders before writing their report to the house.