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Lubowa Hospital: A multi-billion shilling ghost enterprise?
President Museveni (centre) and Ms Enrica Pinetti (third left) look at the artistic impression of the proposed international hospital at the ground breaking ceremony on June 1, 2017. MONITOR PHOTO.
What you need to know:
- Although the project was supposed to be completed three years ago, June 2021, it remains shrouded in mystery and secrecy, with whispers abound with suspicions that it has become a conduit for the blatant theft of public funds.
It is now almost official, the Lubbowa International Specialised Hospital in Wakiso District is a phantom project; a bottomless pit from which billions of taxpayers’ money have been spirited away.
Pictures, taken at great risk by daring photographers, depict the construction site as something of a ghost ground. There appears to be largely a concrete slab of the foundation to show years after Parliament was more or less arm-twisted into appropriating hundreds of billions of shillings to a so-called Italian investor for what was supposed to be a medical facility catering to the rising scourge of non-communicable diseases like cancer.
Today, no one is allowed near the premises, which are guarded by police and the military. The project remains shrouded in mystery and secrecy. Whispers abound with suspicions that it has become a conduit for the blatant theft of public funds.
No less an official than the Auditor General has recently released an indicting report, heavily criticising the Finance ministry for riding roughshod over a Parliamentary resolution stopping payments to the contractors. The stalled hospital project is located just outside the capital city limits on the old Entebbe Road.
At least two attempts by Parliament to conduct an on-site oversight inspection have been rebuffed. Even a delegation of officials led by Health Minister, Dr Jane Ruth Aceng, and her Permanent Secretary, Dr Diana Atwine, was denied entry by security personnel in 2019. In one case, they were told to first obtain permission from Inspector General of Police, Martins Okoth-Ochola. The unanswered question is: why when there is a constitutional imperative for MPs to carry out unfettered oversight in respect of anything in which public funds are involved?
Mr Joel Ssenyonyi, the Leader of the Opposition in Parliament (LoP), became the latest top official on Monday, to be embarrassed at the gates of the planned ‘hospital’ premises. In the company of the shadow minister for health, Dr Timothy Batuwa, and other MPs, the LoP was told by Ms Salama Namutosi, commander of Kajjansi police, that they could not enter the site.
An exasperated Dr Christine Ndiwalana, Bukomansimbi North MP, put the situation in proper context when she told journalists who had tagged along that “…maybe the hospital is underground because there is no indication of progress. It is a failed project which is used to embezzle public funds and this is the very reason why it is highly guarded and even shielded from cameras”.
On Tuesday this week, Speaker of Parliament Anita Among assigned her deputy, Mr Thomas Tayebwa, to lead a team of MPs to Lubowa on an oversight visit. It is not clear when Mr Tayebwa will be heading out as authorities at the House were circumspect when reached for comment yesterday.
“The assignment did not specify when the Deputy Speaker should lead the team to Lubowa, therefore; it is at his discretion to decide when to constitute a team and visit.” Mr Chris Obore, director for communication at Parliament, said in an interview yesterday.
“The Deputy Speaker must have sought her concurrence on when to visit. They constantly consult each other,” he added.
Finasi Ltd, the co-contractor, was supposed to complete construction of the Shs1.4 trillion 264-bed facility three years ago in June 2021. However, the government has now extended the deadline for completion of the controversial project at least thrice, with the new completion date alternately indicated as September 2024 by the Finance ministry and December 2024 by the Health ministry, respectively.
In his new audit report dated December 2023, Mr John Muwanga, the Auditor General, said he was concerned about the “non-adherence” by the Finance ministry to parliamentary budget recommendations.
“Parliament rejected the continued funding for the construction of Lubowa Super Specialised Hospital for lack of substantial progress and for denying parliamentary oversight committees the opportunity to carry out inspections of the hospital site,” he noted in the report.
“However,” the audit report reads, “Ministry of Finance, Planning and Economic Development has continued funding the activity in contravention of the parliamentary recommendation.”
Information in the report of the AG to Parliament for the financial year ended June 30, 2023, also indicates that “the payments totalling Shs286b to the contractors for the hospital was based on unsupported milestone completion certificates.”
The Parliamentary Committee on Budget had in its recommendation for harmonisation of annual budget estimates for the 2022/2023 financial year, called for the reallocation of the money the Finance ministry wanted to pay to the Lubowa hospital contractor.
“This is in respect to promissory notes to be issued to Lubowa hospital construction for the 2022/2023 financial year (to the tune of Shs319b),”the AG noted, adding that “[there is] no evidence for works done in the 2021/2022 financial year despite issuance of promissory notes worth $113.25m (Shs432b)”.
Further in his findings, the AG said: “I advised the Permanent Secretary [Ministry of Finance] and Secretary to the Treasury (PSST) to put in place mechanisms to ensure the recommendations of the Budget committee and other committees of Parliament are complied with to reflect the critical political priorities and address the needs of the citizenry.”
For inexplicable reasons, PSST Ramathan Ggoobi and Finance Minister Matia Kasaija continue to defend the contractor of the ghost project and the reason why they are paying for what looks like hot air.
In April 2022, the minister was hosted on our sister radio station, KFM. He left listeners of the talkshow astonished when he said the failed project should not be entirely blamed on the elusive Ms Enrica Pinetti –the controversial Italian ‘investor’ -- arguing that she was delayed by the Covid-19 pandemic.
“Pinetti lost time not because of her choice, two years down the road, all her staff who had come from China all ran away. Is she the one who brought Covid-19? She got delayed because of Covid-19,” Mr Kasaija said.
In the same month, Mr Ggoobi was reported as saying “September 2024 is the date we expect this [hospital] to open for Ugandans.” He also claimed government has only paid for completed work, work which, however, remains unseen to the naked eye.
“Government only issues promissory notes for project activities and works that have been completed and certified by government’s engineers residing at the Ministry of Health. There is no single dollar which has been paid for work not done,” he said.
It is now more than a year since the Covid-19 pandemic ended in the country, but sources at the construction site indicate that there has been no ongoing work.
The stalled Lubowa hospital project. The Members of the Parliament Committee on Finance and the line ministers were dismayed after they discovered that there was no contractor on their visit to the site on April 21. PHOTO/FILE.
Other sources also indicated that construction materials were instead being removed from the site because the sub-contractor, who was doing minimal civil works, pulled out for reasons that this publication couldn’t independently verify.
Yet more unverified information from sources suggests that there has been rampant theft of construction materials and reinforcing iron bars at the site.
So far, according to the State Minister for Finance, Mr Henry Musasizi, government has spent $156m (Shs592b-plus at current exchange rates) in promissory notes on the facility. He made the revelation in Parliament recently to the consternation of MPs, who wondered where the money went since, they maintained, next to nothing has been done on-site.
Mr George Otim, the assistant commissioner for infrastructure at the Ministry of Health, told this publication on phone: “The construction of the main hospital block has been on halt for some time but auxiliary works, some other works have been going on,” he said.
“They are constructing a perimeter wall, the hostel building is complete, and the training building has been ongoing. When Mota-Engil was terminated, a new sub-contractor was floated and due diligence was carried out.”
He didn’t reveal the name of the new sub-contractor, insisting that the “…sub-contractor is the one who will do the civil works. I don’t know what has taken place but they have been engaged to start the work. The time is not enough anymore, but we still have more than a year”.
“But also, if the sub-contractor is on the ground, even if we are adding them another six months, if the work is so advanced, you will be like ‘okay, we are moving’. The general construction works are at 33 percent completion,” he claimed.
It is noteworthy that Mr Otim told the House Committee on Health in 2022 that he was the only engineer ‘supervising’ the project – but only visited once in a while when he had the time away from his other duties at the Health ministry.
RELATED STORIES: Health minister, MPs blocked from accessing Lubowa Hospital site
Deadline extentions
While presenting the 2023/2024 Health ministry policy statement before MPs last year, Dr Aceng informed MPs that there has been a revision in the completion dates between Ms Pinetti and the government to December 2024, contradicting what the Finance ministry had communicated the previous year.
“Construction is at 32 percent as opposed to 100 percent. Developers cited heavy rains, Covid-19 pandemic, cash flow and need to review the drawings as the causes of delay. New completion date is 30th December 2024,” Dr Aceng said.
The construction site was handed over to the developer five years ago in June 2019 by the Health ministry. Ms Pinetti and the government had reportedly agreed that the hospital would be built in two years, with the proprietors then operating the hospital for six years before ownership automatically reverts to Uganda.
But more than four years later, the project has been bogged down in scandal after scandal. Apparently blind to suspected mischief underway, the Ministry of Finance has continued to pour billions of shillings down the Finasi drain, a controversial course of action MPs have denounced and heavily criticised for lack of evidence that works were progressing.
Dr Charles Ayume, the head of the parliamentary Health Committee, last year described the project as being “brain dead”, and demanded that remittances to the contractor be stopped immediately.
In an interview with this publication, Ms Betty Ethel Naluyima, the Wakiso District Woman MP, who is also the shadow minister for Local Government, indicated that as a leader from the area where the proposed hospital is located, the project has remained a mystery to her. She said there is not much she can do about the project.
“The Lubowa project is so much in our books as Parliament, we have made recommendations and reported about it and that means we are doing our best as Parliament and it is now up to the Executive. What we recommend is what we stand for and the best we can do is to recommend. The rest is now for the Executive, which is answerable for any loss of taxpayers’ money,” she added.
LoP Ssenyonyi said in Parliament three weeks ago: “We were told that with the construction of Lubowa specialised hospital, medical tourism would come to an end. That promise has since become a shadow yet we have been injecting money into it…what is there to see? Your guess is as good as mine.”
Our calculations found that given the current pace, if at all, Finasi Ltd would need 10 years instead of two to complete the construction of the multi-billion shilling facility –if they continue muddling along as they have.
Health Minister Dr Jane Ruth Aceng (centre), PS Diana Atwine (right) and then Ruhinda North MP Thomas Tayebwa stand outside the prosed Lubowa hospital premises after they were denied access to the site in July 2019. PHOTO/DAVID LUBOWA
In March last year, Dr Aceng again asked MPs to endorse Shs2.7b, purportedly to be spent on supervision of the project. The request was roundly rejected by MPs, who told the minister she ought to be aware that, in reality, there is nothing to supervise since no works were ongoing at Lubowa. MPs on the parliamentary Health Committee, in their meeting, said they wanted the project terminated.
How we got here
Parliament in March 2019 approved a government request to guarantee a $379m (about Sh1.4 trillion) loan to Pinetti for the construction of the hospital, an amount which health NGO, Initiative for Social and Economic Rights (ISER), said made it “the most expensive hospital that will be built in Uganda.”
ISER, an organisation which is also advocating for the termination of the project on legal and socio-economic grounds, said the process leading up to this milestone began between 2014 and 2018 when the government and Finasi/ROKO Construction quietly entered into some agreements without parliamentary approval.
“Article 159 of the Constitution of the Republic of Uganda provides that before executing any agreements in which the State offers a loan or a guarantee, Parliament is required to approve. However, this provision was not adhered to in the specific case of Lubowa International Hospital’s development.
“In this case, it was only later in February 2019, that the then State minister of Finance tabled a motion before Parliament and urged that Parliament approves payment of the initial batch of promissory notes since the contractor had completed the first construction milestone...Despite this, Parliament later retroactively approved these notes,” the ISER said in their 2023 position paper on the project.
Article 159(2) says: “Government shall not borrow, guarantee, or raise a loan on behalf of itself or any other public institution, authority or person except as authorised by or under an Act of Parliament”.
Clause (3) says “An Act of Parliament made under clause (2) of this Article shall provide— (a) that the terms and conditions of the loan shall be laid before Parliament and shall not come into operation unless they have been approved by a resolution of Parliament”.
Under this agreement, the Finance ministry was supposed to pay the contractors for the works completed through the issuance of promissory notes.
“The government also entered into a direct lenders agreement with the financers identified by the company, effectively granting them rights over the issued notes. In addition, Finasi was granted free land at Lubowa - off Entebbe Road in Wakiso District and tax holidays spanning eight years,” ISER further wrote in their paper.
View from Finance
However, the Finance ministry in March 2019 said in the agreement, Finasi/ROKO Construction Ltd was responsible for “raising the financing for the design, construction, equipping, and the training of medical personnel over two years.”
On whether the government was issuing a guarantee for a loan that Finasi-ROKO Construction would contract in order to finance the project development, the ministry said: “Government is not issuing any guarantee for a loan. It is only giving assurances (a firm promise through irrevocable promissory notes) that what is due to Finasi/ROKO Construction will be paid at a future date.”
According to the ministry, the total project cost was to be $249.9m (Shs954b) with the facility covering 85,000 square metres of built-up area. But that cost estimate was driven up midway, running into $379.71m (in excess of Shs1.4 trillion). The ministry claimed by way of explanation for the cost overrun that: “$129.81m (over Shs494 billion) represents the ‘Time Value of Money’ or interest cost of payment that government has to incur as a result of repaying Finasi/ROKO Construction over six years. The [money] represents an effective interest of 6.49 percent.”
Additionally, the ministry implied that the Lubowa hospital would save Uganda a lot of money and increase access to specialised care. At the time (2014), government had estimated that the country was losing $73m (Shs278b) per year through medical tourism.
Both the project and the project land are fully owned by the government but “the responsibility for the hospital development has been given to Finasi/ROKO Construction Ltd,” according to the Finance ministry.
About the facility
In the blueprint, the facility, meant to be built some 13kms away from Kampala city centre, would be divided into four zones, including clinical, education, recreation and housing zones. The hospital was meant to have 54 oncology beds, 27 infectious disease beds, 27 medical beds, 16 VIP beds, as well as 60 outpatient beds.
There would also be 54 surgery beds, 27 paediatrics beds, 27 for obstetrics and gynaecology, 16 Intensive Care Unit (ICU) beds, with eight for neo-natal and eight for adults. It would also have 11 operating theatres. An 80-room hotel was also planned.
Dr Aceng, in a statement to Parliament in July 2019, on the Lubowa project, said the objective of the project was two-fold: “To reduce the morbidity and mortality attributable to non-communicable diseases, and to reduce resource haemorrhage attributable to medical tourism.”
But ISER said the construction of the facility should be discontinued to save taxpayers’ money and that even if it is finally constructed, the facility would offer very little benefit to Ugandans.
The organisation further defended its position: “As of now, the essential package of [public] health services is underfunded, culminating in stock-outs of essential medicines and poor quality of health care. The money the government allocated to the Finasi/ROKO joint venture could have been utilised to support national and regional referral hospitals three times over.”
The ISER point on re-allocation of Ugandans’ money is exactly what Mr Ssenyonyi and his shadow cabinet have now resolved – any more planned disbursements to Lubowa should instead be spent on the struggling Mulago National Referral Hospital and other key public health facilities.
It is time to cut our losses and bury the ghosts of Lubowa, seems to be the view from Parliament and elsewhere.
Two years ago, MPs said the reasons given by Dr Aceng during a House Health Committee meeting held on Tuesday, April 19, 2022, were not convincing for what is now “a big political problem.
“When members went there, we found works at foundation level. We cannot blame the Covid-19 lock-down. The National Medical Stores building in Kajjansi started at the same time and it is now complete. Probably, the issues of Lubowa have to do with incompetence,” committee chair, Dr Ayume, said then.
The committee was surprised to hear from Dr Aceng that construction works were now being supervised by the Office of the Prime Minister.
As things stand now, no one outside of maybe Ms Pinetti and her backers in government -- who include President Museveni, really knows what is happening inside the closed-off Lubowa hospital site.
A Monitor journalist assigned to do a report about the project last year was summarily arrested at the building site and dumped into a police cell for hours by soldiers who wore uniforms similar to those adorned by elements of the army Special Forces Command – a unit which, among others, guards the President. And that in many ways tells the story of this apparent ghost enterprise.
TIMELINE FOR LUBOWA HOSPITAL PROJECT
2015
October: Government signs the Project Works Investment Agreement with Finasi/ROKO SPV Ltd, approving the construction of the hospital.
December:
Government signs with the contractor a Project Services Agreement for the construction, operation & maintenance of the facility for eight years.
2017
June:
President Museveni launches the construction of the International Specialised Hospital
2018
December:
Government signs a Direct Agreement in December 2018 with the lenders and contractor of the hospital.
2019
March:
Parliament approves a government request to guarantee a $379m (Sh1.4 trillion) loan for the construction of the facility.
June:
Construction site officially handed over to the contractors by the Health ministry, with June 2021 as the completion date.
June:
Disagreements erupts between Finasi and ROKO, leading to removal of ROKO Construction Company Ltd from the project.
July: Parliamentary committee on Health and Health minister blocked from inspecting site by security personnel.
2021
June:
Contractor fails to complete project within the allotted time. Construction reportedly at 24 percent. Government extends deadline by 15 months to September 2022, citing Covid-19 disruptions.
2022
September:
Finasi again fails to complete project. Finance ministry again pushes deadline to September 2024. Health ministry says construction deadline is December 2024.
2024
January:
January 2024 – House Health Committee chair, Dr Charles Ayume, calls for “suppressing” of government financing to Lubowa, in effect asking that it be stopped.
