Parliament approves US$ 100 million loan for Acute Referral Hospital

The government has defended its decision to award a US$100 million contract to a Taiwan firm for the construction of the Acute Referral Hospital at Arnos Vale, as the Opposition expressed concern about it in Parliament.

The Government has awarded the contract to the Taiwan firm, Overseas Engineering Construction Company (OECC), but came under criticism from the Opposition for not going back to tender after having initially negotiated a loan of US$ 98 million with the World Bank for the project.

Speaking in Parliament on Thursday, August 22, 2024, Prime Minister Ralph Gonsalves said “ the contract is still being finalized,” and countered the opposition claims that the contract is worth $120 million.

In his contribution to debate on the Arnos Vale Care Hospital (Construction Project) Loan Authorization Bill, Gonsalves pointed out that “the OECC is not a company which is unknown to St Vincent and the Grenadines”.

Piloting the Bill in Parliament on Thursday, Minister of Finance, Camillo Gonsalves credited OECC with constructing the terminal building at the Argyle International Airport and constructing roads and a number of buildings in St Vincent and the Grenadines.

Leading off the debate on the Bill, the finance minister said the government was seeking to obtain a loan of $125 million to build the hospital, and also for the Health Care Resilience Project.

Original negotiations for this work began with the World Bank, but minister Gonsalves said the government was not satisfied with the pace at which the World Bank was moving, so they switched to Taiwan to source the loan for the multi-million dollar project.

Minister Gonsalves added that there also were challenges with the consultants and co-financiers for the project.

They had secured a loan of US$30 million from the OPEC Fund For International Development (OFID) and this was used to supplement the World Bank’s financing for the new hospital at Arnos Vale.

Parliament had already approved the financing for the World Bank/OFID project.

However, Minister Gonsalves explained that the government no longer wants to use the World Bank/OFID funds to construct the Acute Referral Hospital. He said these resources will be put to use in the government’s Hurricane Beryl recovery plan. This will be through the Beryl Emergency Recovery loan, the minister explained.

The Acute Referral Hospital is to be constructed on a portion of the decommissioned E.T Joshua Airport runway at Arnos Vale. The land has already been turned over to the Taiwanese company and is already fenced in preparation for the start of construction.

The finance minister said on completion in the next two and a half years, the Acute Referral Hospital will be “ the envy of countries all across the Eastern Caribbean and beyond”.

In 2021, the government had already obtained the design and had done consultations for the then World Bank project. The government subsequently signed a Memorandum of Understanding (MOU) with the Taiwanese company for the construction of the 134 bed hospital.

The facility will be climate resilient and should be able to withstand a category 5 hurricane packing winds of up to 160 miles per hour.

In his contribution to the debate on the Bill, the Opposition’s shadow minister of health, Daniel Cummings, expressed concerns about the awarding of the contract to a single contractor rather than going back to tender.

“What is the rationale of awarding a contract for US $120 million, without having any other offer to compare it with?” Cummings questioned.

“ How can we be guaranteed that there isn’t a better option, at a lower cost to this country?”

Several other members of Parliament on both sides also contributed to the debate on the Bill.

East Kingstown Member, Fitz Bramble said this loan will increase the national debt, which now stands at EC $334 million.

In wrapping up debate on the Bill, Finance Minister Gonsalves acknowledged that the OECC estimates are 15 per cent higher than the estimates received from the World Bank’s consultants.

The minister pointed to the rising cost of labour and material as factors influencing the increase.

He also said the World Bank estimates did not include everything in the project. Mindful of the queries the finance minister assured that there is nothing sinister about the awarding of the new contract. Parliament approved the loan for the project in the early hours of Friday morning, August 23, 2024.