Borrowing Limitations Hampered Ridge Hospital Project

Sherry Aryittey – Health Minister
Details are emerging about the upgrade of the Ridge Hospital in Accra which has generated political debate about the actual cost of the project.

A document sighted by BUSINESS GUIDE indicates that the project component would cost Ghana a whopping $306 million but due to the Ministry of Finance’s 2012 credit limit on borrowing, the government could only borrow $250 million for the project.

On the basis of the limitation in government’s capacity to borrow, the government requested the contractor Messrs Bouygues Batiment International (BBI) to submit a proposal designed to reduce the budget, and as a result the project is going to be implemented in two phases.

The document said the project, when completed, is expected to have facilities for surgery, radiology, internal medicine, pharmacy, maternal and pediatric care, accident emergency, ear nose and throat, ophthalmology, dermatology, physiotherapy, dentistry, urology, cardiology, as well as laboratory.

The rest are anesthesia, teaching, administration, medical gas systems, sewerage treatment plant, landscaping, roads and internet.

‘It should be emphasized that the design has been done for the 620-bed hospital to encompass all the requirements for which all the technical support services are enshrined in phase one,’ the report revealed.

The report said the proposal for the 620-bed hospital, which would be implemented in two phases, albeit allowing the first phase to be fully functioning, was forwarded to the Ministry of Finance for value for money assessment.

‘The major issue that was negotiated was upon pricing. The contractor justified their offer by indicating that they were not over-priced by $142 million as has been indicated in the report. After extensive negotiations and justifications by the contractor, Crown Agents were still of the opinion that the project cost could still be reduced by $88,254,270,’ the report said.

It said, ‘The issues and reasons for which CAGL stripped the unit cost of BBI from an estimated $6757/m2 to the EFMP of $3000/m2 was then the focus of the negotiations.’

The report said subsequently BBI, in their analysis, put forward further justifications which were specific to the Ridge Hospital project and justified the contractor’s pricing.

‘The project has really gone through all the necessary statutory approvals and laid down procedures for procuring single source projects,’ the report affirmed, adding ‘the final report of Crown Agents advising on value for money made some recommendations, which have been fully implemented and these formed part of the submissions to Parliament in February 2014.’

By William Yaw Owusu

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