NETCARE Hospital Group, a major shareholder in the Public Private Partnership (PPP) between the government and Tšepong Consortium has taken a shot at the government of Lesotho, accusing it of prematurely terminating the PPP agreement.
July 15, 2021
3 min read
Netcare accuses govt of premature termination of contract
The Tšepong Hospital
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The group says the government is in four-month arrears and is not willing to pay before the complete termination of contract scheduled for August 31.
As a result, the group is no longer prepared to fund the ongoing operations on behalf of the PPP.
The Tšepong consortium is the principal contractor in the PPP agreement and Netcare has been sub-contracted to manage Tšepong, providing all clinical services required to operate the Queen Mamohato Memorial Hospital (QMMH) and the primary care clinics on behalf of the consortium.
Netcare further blames the government for repeated non-payment of fees due to Tšepong.
In a statement released on Wednesday, Netcare confirmed that it has started a process of handing over operations at the QMMH and its four primary care clinics in Maseru to the government.
“This is as a result of the public private partnership (PPP) agreement being prematurely terminated, with effect from 31 August 2021. The handover has been brought forward, however, following the ongoing non-payment of fees due to Tšepong by the government.
“The decision to commence the handover of the facilities and operations follows the repeated failure by the government to settle the arrear payments for services rendered by Tšepong. The government has been persistent in demanding that Netcare, as a sub-contractor, continue to provide full services until 31 August 2021, notwithstanding that it is currently four months in arrears and is now into the fifth month of unpaid contractual monthly fees,” Netcare reiterated in the statement.
In its capacity as a shareholder of Tšepong and as the major provider of services to Tšepong, Netcare has continued to act in good faith and provided ample written notice to Tšepong and the government as well as follow-up reminders that the government is substantially in default of its payment obligations under the PPP agreement.
The government, according to Netcare, has repeatedly reiterated that it has no intention of making these scheduled, contractual payments at this stage and will only consider making payment after the PPP termination date of August 31.
In light of these circumstances, Netcare is no longer prepared to fund ongoing operations on behalf of the PPP. The company has provided financial support on numerous occasions over recent years to enable continued operations at the hospital and primary care clinics when the government failed to make timely payment for services.
The refusal by the government to pay the outstanding fees clearly places an unreasonable expectation on suppliers to continue providing full services at a substantial level of commercial risk to other businesses.
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“I am pleased that Netcare is leaving the QMMH with exceptional credentials and we will do our utmost to facilitate a smooth transition to the government. Furthermore, the hospital has been certified to provide COVID-19 treatment, which is desperately needed during this difficult and challenging time.
“To this end, Netcare has personally contributed over M1 million in personal protective equipment to protect staff, as well as testing kits to aid in the fight against COVID-19 to care for the increase demand. We are also pleased about the extent of our contribution toward the Basotho community development over the past 11 years,” Netcare Chief Executive Officer Dr. Richard Friedland said.
The consortium of Tsepong shareholders comprises Netcare, which holds a 40 percent interest, while the remaining 60 percent shareholding is held by Afrinnai Health (Pty) Ltd with 20 percent, Excel Health Services (Pty) Ltd with 20 percent as well as D10 Investments (Pty) Ltd with 10 percent as well as the Women Investment Company with 10 percent.
The respective entities represent consortiums of their own shareholders and are clustered to represent shareholders with common interest.