Deputy Prime Minister and Finance Minister Professor Biman Prasad said Government has been paying Health Care Fiji Pte Limited $10 million a month since 2019 for services provided at the Ba and Lautoka Hospitals.

“So these two hospitals, alone, are consuming more than one-fifth of the entire national health budget,” he said while delivering the 2024-2025 Budget in Parliament last week.

Prof Prasad said there were a number of issues in the Aspen Medical and Fiji National Provident Fund  Public Private Partnership (PPP), including the fact that FNPF was “effectively ordered to take an 80% stake” in Health Care Fiji Pte Ltd.

He said this was “the extent of the serious and unlawful political interference in the affairs of FNPF” that was taking place under the FijiFirst administration.

“In 2019 the previous Government decided that it wanted a PPP to develop the two public hospitals in Lautoka and Ba. This was an initiative of the then Minister for Economy. The Ministry of Health was not involved or at least only marginally involved.”

He said the PPP was to create a concession agreement for a private company to come in, completely rebuild the Lautoka Hospital and then operate it for 30 years, together with Ba Hospital where the concessionaire would charge fees for its services.

Prof Prasad said involving the private sector in health care, particularly if it can deliver new facilities that the Government cannot afford, is an appropriate option as long as it is carefully managed.

“Unfortunately, this project was not managed well.

“The previous Government did no “demand study” for the project. In other words, before it signed an agreement to pay for a range of medical services to be provided to the public, it had no idea how many people would use the services, for what purpose, and the resulting cost. The Concession Agreement was basically a blank cheque for the concessionaire.

“Next, the previous Government had to select the concessionaire. The selected technical partner was Aspen Medical. However, the previous Government wanted local involvement in the deal. So it decided FNPF should be Aspen’s partner.”

Prof Prasad said FNPF did not bid to be part of the project. It was effectively ordered to take an 80% stake in a new company called Health Care Fiji Pte Ltd, while Aspen took 20%.

He said the COVID-19 pandemic delayed the project over 2020 and 2021 and in 2022, the FijiFirst Government “changed its mind.”

“Even though the new hospital had not yet been designed or re-built, HCF was ordered to begin providing medical services. There was no agreement for this. HCF prepared and delivered an agreement to the Government to cover this change in the transaction. The previous Government ignored it. HCF was told to begin providing the services with the specific terms to be agreed later.

“Two years later, these terms have still not been documented.”

Porf Prasad said over the last 18 months HCF and the Coalition Government have been in dialogue over a number of aspects of the Concession Agreement.

“There are legally binding agreements now with serious financial consequences for all the parties if they are breached. So it has not been easy to work out our next steps.

“The good news is that in our dialogue with HCF’s leadership we believe that HCF understands the problem and is prepared to work with us to fix it.

“This project will have to be completely renegotiated.”