MPs: Halt construction works of Lubowa specialized hospital

KAMPALA, UGANDA | THE INDEPENDENT | Members of Parliament on the Public Accounts Committee-PAC are calling for the halting of the construction works of the Lubowa Super Specialized Hospital Project because of a lack of proper accountability.

The MPs also want the project engineer to be charged in court for issuing what they called false completion certificates on the basis on which the government signs promissory notes for the project.

PAC Chairperson and Butambala County Member of Parliament Muhammad Muwanga Kivumbi made the recommendation in their report emanating from the financial year of 2022/23 Auditor General’s report.

In 2015, the government contracted an Italian company Finasi-ISHU Construction SPV SMC Limited to undertake the design, finance, construction and equipping of the International Specialized Hospital of Uganda at Lubowa. The government signed a Promissory Note Purchase Agreement in December 2018 through the Ministry of Health the Africa Export-Import Bank; Trade & Development Bank, and Barclays Bank Limited among others to fund the project up to $ 379.71 million.

Parliament also approved the project in March 2019. The financing modality of the project was such that Finasi enters into a financing agreement with the government; which agreement then serves as collateral to secure financing to implement the project. The agreement also states that upon completion of project works per period, the works are then validated by the Ministry of Health and milestone completion certificates issued.

It’s upon this that the Ministry of Finance then issues and later redeems the matured promissory notes to the contractor for the works already done.

The MPs note that since then, the government has redeemed seven promissory notes worth $ 133.6 million which translates into 35.2% of the total project cost of $ 379.71 million. However, the MPs note that the owner’s engineer has issued a completion certificate; a basis on which payment is based without having complete access to the construction site to ascertain whether the said milestones have been achieved. This has led to the payment of 286 billion Shillings without proof of work done. “Audit further noted that the milestone certificates were largely based. On reports submitted, the contractor’s engineer consultation fees and not for the physical works completed…However, the Auditor General reported that the owner’s engineer had certified only 23 % of the completed works valued at $57.477 causing a possible overpayment of $ 76.088 (Shs 286billion),” the MPs observed.

The MPs also noted that the government did not do proper due diligence on the agreement and project as a whole which has led to doubts on the payments made against the amount of work done. The MPs also questioned the secrecy through which the project is undertaken.

They noted that even when they requested supporting documents, they were only given copies of promissory notes and not the milestone completion certificates, upon which the Accountant General relied to honour the promissory notes. “The Committee could not ascertain the extent of works at the site as its numerous attempts to visit were frustrated by the project by the project developer, and therefore cannot ascertain if any works are being carried out at the site. This is therefore a ghost enterprise and the possibility of Ugandans losing money under this project is therefore a rife reality that this parliament must take interest and pronounce itself on,” the report notes.

There has been a lot of push and pull between MPs and the government on the financing of the Lubowa project.

President Yoweri Museveni has defended the need to have a super-specialized hospital in Uganda to cut the cost of treating especially government officials abroad.

However, MPs particularly those in the opposition have cast doubt on the project pointing out that the owner of Finasi, Enrica Pinetti has no known experience in undertaking such a project.

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