A Megawide Construction Corp.-led consortium wants out of one of the government’s touted public-private partnership (PPP) projects, citing inaction by the contracting agency nearly two years after the deal was awarded.
Megawide, which has won four other PPP deals offered by the government, on Tuesday said it had filed a notice of termination with the Department of Health (DOH) regarding the P5.69-billion modernization of the Philippine Orthopedic Center (POC).
The firm, along with World Citi, Inc., formed Megawide World Citi Consortium, Inc. (MWCCI) that was awarded the hospital project in December 2013. It was the sole bidder in an auction staged in June that year.
Louie Ferrer, chief marketing officer of Megawide, told The Manila Times that the Health department had 30 days after the project awarding to deliver a “certificate of possession,” still to be delivered nearly two years since the firm won the project. The document will give MWCI the legal right over the land on which the new hospital will be built.
“We sent the notice of termination to the DOH. We haven’t received the certificate yet . . . it’s been years now,” Ferrer said.
“There is no firm action. They [DOH] said they were still reviewing the contract. But the president already signed and reviewed it,” he claimed.
In a disclosure to the Philippine Stock Exchange, Megawide said MWCCI was exercising its “right to terminate” under its build-operate-transfer (BOT) contract with the department.
The 25-year BOT deal involves the construction of a 700-bed orthopedic hospital to be located within the National Kidney and Transplant Institute (NKTI) compound along East Avenue, Quezon City. The winning bidder will design, build, finance, operate and maintain the facility until the end of the concession period, and then transfer the hospital to the Health department.
NKTI to blame?
The department, meanwhile, said the delay in the awarding of the certificate of possession was due to land ownership issues with the NKTI.
“While DOH sits in the Board of NKTI, it failed to convince the management of the said hospital to allow the use of their land for the proposed Public-Private Partnership (PPP) project,” the department said in a statement,
It added that former Health Secretary Enrique Ona, during whose term the POC project was awarded, and current Secretary Janette Loreto Garin had both failed to secure NKTI support.
The Health department also enumerated other problems hampering the project, including the displacement of current POC employees, difficulty in implementing a new PhilHealth case rate policy and a delay in the appointment of an independent consultant.
“DOH cannot abandon its duty of ensuring care for our indigent patients in the Philippine Orthopedic Center if their place of transfer cannot be ensured. Furthermore, it will be unfair to expect Megawide to shoulder the cost of caring for our indigent patients, and be obligated to absorb all displaced employees pending approval of a new law in Congress to create the rehabilitation hospital,” Garin said.
The Health department said it had yet to meet with Megawide regarding the termination notice.
In a separate statement, Megawide said the decision to terminate the PPP contract was “not one that was made lightly.”
“We participated in the tender with the belief that our fellow Filipinos deserve an efficient hospital facility to complement the care and service already shown by the staff of POC,” the company said.
“Despite difficulties, it is a project that we continue to believe in. We continue to support the DOH and this Administration in their vision for inclusive healthcare for all Filipinos,” it added.
Last year, Megawide said MWCCI had entered into an omnibus loan and security agreement with the Land Bank of the Philippines and the Development Bank of the Philippines for the hospital project.
Including the hospital project, Megawide has won 5 of the 11 PPPs that have been bid out by the government, including the P2.5-billion Integrated Transport System-Southwest Terminal, the P16.28-billion first phase of PPP School Infrastructure Project and the P3.86-billion second phase, and the P17.52-billion Mactan-Cebu International Airport Passenger Terminal Expansion.