Megawide terminates PH Orthopedic modernization project

MANILA, Philippines – A subsidiary of listed builder Megawide Construction Corporation has terminated its contract with the government to rehabilitate the Philippine Orthopedic Center (POC).

This is because implementing agency “Department of Health (DOH) has not given us the certificate of possession for the project site yet,” Megawide chief information officer Louie Ferrer said in a text message reply on Tuesday, November 17.

The DOH awarded the P5.69-billion ($120.74-million) modernization of the POC project to Megawide World Citi Consortium, Incorporated (MCCI) in December 2013. 

Megawide initially targeted the project to be finished in 2017. But in a disclosure to the local bourse on Tuesday, Megawide announced that it “served upon DOH a notice of termination of the BOT (build-operate-transfer) agreement” between the company and the government for the modernization of POC. 

“This is pursuant to MWCCI’s right to terminate under sections 8.2 and 9.2a of the BOT agreement,” Megawide said.

Early this year, Megawide entered into a loan with government banks to fund the hospital PPP project.

It signed an omnibus loan and security agreement with Land Bank of the Philippines, Land Bank of the Philippines-Trust Banking Group, and Development Bank of the Philippines.

DOH explains delays

In a statement, DOH said it was unable to issue the certificate of possession for the project site on time because it “failed to convince the management of the National Kidney and Transplant Institute (NKTI) to allow the use of their land for the PPP project.”

This is even DOH sits in the board of directors of NKTI.

DOH cited other issues that hurdled the implementation of the project — such as the displacement of current Philippine Orthopedic Center employees and the implementation of the PhilHealth new case rates policy in mid-2014.

Furthermore, DOH added that it had difficulty in appointing an independent consultant for the PPP deaL. “All of which were unanticipated by the DOH and which negatively affected the implementation of the project.”

“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,” DOH Secretary Janette Loreto-Garin said in the statement.

In March, the Public-Private Partnership (PPP) Center stressed in a statement that the hospital is up for modernization, not privatization.

Not only the patients and the patients’ families expressed their opposition to the reported privatization of the hospital, but also the medical staff, the nurses, and the doctors. (READ: Fears abound in Orthopedic Center’s privatization)

World Citi, operator of the World Citi Medical Center along Aurora Boulevard in Quezon City, was supposed to manage the new POC during the 25-year concession period.

Megawide had won 5 of 11 awarded PPP deals since the Aquino administration launched its flagship project in 2010.