Retracting decisions on new hospital could cost country $30M, SMMC warns | THE DAILY HERALD

~ Requests no interference in project ~

CAY HILL–Pulling back the decisions regarding the construction of a new general hospital for St. Maarten could cost St. Maarten millions of dollars and delay the project by a year, St. Maarten Medical Center (SMMC) warned on Monday. SMMC is also requesting no interference in the project.

The hospital’s comments come on the heels of a motion of no confidence tabled against Health Minister Emil Lee during Friday’s debate on the draft 2019 budget in which the construction of the hospital was mentioned.

“SMMC has to assume that with the contract for the financing already signed by SZV [Social and Health Insurances – Ed.] in 2018 that there is nothing in the wording of the motion that requires the SZV to pull back previous decisions,” SMMC said in the release. “If that were the case, this could lead to large negative financial obligations for damage compensation from SZV costing the citizens of St. Maarten millions of dollars. SZV, in its capacity as one of the lenders, has to comply with the terms and conditions of the loan agreement which include, amongst others, funding the requested drawdowns based on the progress of the construction of the new hospital.”

The hospital Board of Directors and its Supervisory Council said in the release it had taken note of recent developments stemming from the 2019 budget debate. “Albeit SMMC has always and will always remain neutral, it behoves SMMC to point out its concerns what the consequences could be for SMMC and healthcare in general on St. Maarten going forward if the motion is aimed at halting the construction of the new hospital project.”

Important to note, SMMC said, is the fact that the contract for the construction of the new hospital was awarded to Italian contractors INSO by SMMC, after a public bid in September 2016, and has been backed by every party and faction ever since. In February 2018, the loan documentation with SMMC had been signed by a large group of lenders of which SZV is one. As of 2017, INSO has been working on the design of the new hospital and INSO is now preparing the start of the construction of the new hospital, SMMC said.

“In the entire process of the new hospital project, the government of St. Maarten has played a supportive role which includes the process that SMMC has given INSO the time to establish the promised financial guarantees as a condition for INSO to be able to execute the building project, since INSO went into its own special administrative procedure. The special administrative procedure does not mean that the construction contract of September 2016 is terminated automatically.”

SMMC said it was discussing with INSO additional securities for SMMC, which negotiation is expected to be concluded by the end of July to mid-August. Decisions made will not require government’s input and are completely up to the lenders and SMMC to approve.

“SMMC estimates the hard costs – if the new hospital project would be terminated as a result of the proposed motion that seems to try to restrict SZV in its role as one of the key lenders – to be over US $30 million for country St. Maarten over the short and long terms. This will also hamper SMMC in its path to continuous improvement in healthcare. Additional costs to the project and healthcare costs by unnecessary delays could be enough on its own to build a new hospital,” SMMC warned.

Since INSO has been split off from its parent company Condotte as of December 5, 2018, SMMC and lenders alike value the packages of financial guarantees that INSO is currently putting together. Proceeding with INSO once the guarantees are in place limits risk almost entirely, while this motion would result in losses to SMMC and SZV alike of $30 million if a new tender were to be contemplated. Furthermore, a new tender would easily mean a delay in the construction of the new hospital for more than a year, SMMC said.

“A motion of no confidence against a minister cannot undermine the contractual obligations of SMMC with a duly selected contractor to build the new hospital and to provide quality healthcare close to home, which benefits the entire population of St. Maarten. The Board of Directors, the Supervisory Council, Management and staff of SMMC request no undue interference but welcome the opportunity given to further inform Parliament and thus the public about the current process of the new hospital project and the due diligence exercised by SMMC,” the hospital said.

Source: The Daily Herald