Fears raised about cost of PPP hospital in Uganda

  • Uganda Debt Network says government has guaranteed $380 million in payments for hospital which was due to cost $250 million

The Uganda Debt Network has raised concerns about the financing of a Public-Private Partnership (PPP) hospital at Lubowa just outside Kampala. The hospital is to be built and operated for ten years by a consortium including Finasi of Italy and ROKO Construction Limited of Uganda.

Uganda Debt Network state that there was no open bidding or competitive process for awarding of the PPP contract. The total project cost has been listed as $250 million. However, the Ugandan government has received parliamentary approval for a promissory note for $380 million to cover all the possible costs. This is likely to effectively guarantee a profit for the private contractors, placing all the risk of the project on the public sector.

Kampala, capital of Uganda (Travel Aficionado / Flickr)

In other countries such as the UK, hospitals constructed using PPPs have cost the government twice as much as if the government concerned had financed and built it directly. The guaranteed payments to PPP companies can work out significantly more expensive than the interest on government borrowing. Despite the UK government criticising and abandoning its PPP programme, it is still using aid money and diplomacy to push other countries to adopt PPPs.

Previous PPPs in Uganda in the electricity sector have led to increased costs to the government.

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