• Minister: 'Real money set aside' for facility

• Switch from PPP model as costs too high

• Talks with Sir Franklyn on Perpall Tract site

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government is prepared to guarantee the $290m financing for New Providence's new hospital, a Cabinet minister revealed yesterday, adding: "This is a worthwhile investment for the Bahamian people."

Dr Michael Darville, minister of health and wellness, told Tribune Business "there's a lot of appetite" - and that the Davis administration has been "getting some good hits" - from potential financing sources after switching away from the previously-planned public-private partnership (PPP) model for the new hospital's development.

That would have involved a private sector group financing, constructing and operating/managing the facility, but he explained that the Government had moved away from this approach because it felt the interest rates, or cost of financing, available under the PPP model was too high.

Confirming that he is now moving to "finalise" the project's financing, Dr Darville told this newspaper that while there is "money out there" it has to be at a price/cost that Bahamian taxpayers can bear. To achieve that goal, he explained that the Davis administration felt the project is of such critical importance to the population's health and well-being it is prepared to underwrite any borrowed financing with a government guarantee - even though this will add to the $11bn national debt.

The new hospital's total projected cost, $289.399m, is revealed for the first time in documents accompanying the 2023-2024 Budget. Some $2m, and $8m, of that sum will be spent on "preparatory works" during the 2023-2024 and 2024-2025 fiscal years, respectively, with construction projected to ramp up in 2025-2026 with an $160m outlay.

The minister said these figures, together with those for the Grand Bahama hospital, "demonstrate to the Bahamian people this is not just talk; real money has been set aside" to upgrade and improve public healthcare facilities in the country's two major islands.

Dr Darville confirmed that a 50-acre site in the Perpall Tract area, near the wellfields and to the east of the road that connects the Saunders Beach roundabout with JFK Drive's 'six-legged' roundabout, has been selected for the new New Providence hospital. He also affirmed, in response to Tribune Business questions, that 14 acres of the site have been obtained via negotiations with Sir Franklyn Wilson, the Arawak Homes and Sunshine Group of Companies chairman.

The Perpall Tract hospital will feature maternal, child and adolescent care, along with the blood bank and advanced diagnostic facilities. It will also provide "mass casualty" facilities in terms of sufficient bed and care capacity in the event of emergencies such as the recent COVID-19 pandemic.

Dr Darville said the new hospital will free up space at Princess Margaret Hospital's existing facilities for greater medical and surgical services expansion, adding that he was moving to ensure there is adequate staffing for the Government's hospital plans amid the ongoing "bleed" of talent that is being lost to the US, Canada and other healthcare markets.

"We are pretty much advanced," the minister told Tribune Business yesterday. "We have completed the feasibility study with our plans, and we have already selected the land. It was a drawn-out process because the land is close to the Perpall Tract waterfields.

"We had about four potential sites. We did investigations on some of the other sites, but they had some sink holes and we had to look for firmer ground." Dr Darville said the land allocated for the Perpall Tract hospital had previously been earmarked for development as a housing subdivision, and geo-technical studies had confirmed the site is "rock solid" and suitable for construction of a multi-level complex such as hospital with "no sink holes" present.

"We have 50 acres of land," the minister added. "We may lose a few acres because some are in close proximity to the wellfields, but we have adequate land for the first phase and second phase construction." Architects' drawings, renderings and the feasibility study have now been completed, while an agreement has been reached that the Government will compensate Sir Franklyn and his companies for the 14 acres acquired.

"We had a negotiation ongoing with him," Dr Darville said of talks with the Arawak Homes chair. "He has agreed in principle that he would allow us to continue the project. Our job is to now finalise the equity: A payment or a land swap. We negotiated that this was the best way to go. He has agreed in principle, and conceded, to allow the project to go forward pending us giving him compensation."

Disclosing that the Government has had to alter its financing strategy for the new hospital, Dr Darville told Tribune Business: "Now we are out on the international market with the feasibility study look for low interest rate financing. We spent almost a year looking at potential PPP projects, and potential investors, but could not get interest rates that were palatable. Everything seemed too high out on the international market"

As a result, he said the Davis administration had determined to seek the targeted low-cost financing on its own - with the possibility of a supporting government guarantee - given that the successive interest hikes by major global central banks to combat inflation have moved borrowing costs higher and against The Bahamas' favour.

Pointing out that it has not yet been determined if a government guarantee is required, Dr Darville said moving the new hospital forward is "in the best interests of the country" when it comes to healthcare and the well-being of the Bahamian people.

"There's been a lot of appetite for it," he said of the New Providence hospital financing, "and it's been very favourable thus far, but we've not finalised funding for the New Providence hospital... I'm now at the financing stage. We are getting some good hits. I was hoping to make an announcement in the Budget. It's a bit premature, but things are looking good.

"We're closer. We're months away from finalising the financing. We've had a couple of hits. It's just a matter of making the determination of where we go to find funding." Dr Darville said "a variety of different groups" have come to assess the feasibility plan and the Perpall Tract site, with the Government especially keen to tap available financing from multilateral lenders such as the Inter-American Development Bank (IDB) because they offer lower interest rates and better terms.

Revealing that he is due to have discussions on the hospital's financing with the UK High Commissioner later this week, Dr Darville told Tribune Business: "There's money out there, but at the right interest rate. We did not get the interest rate we thought we would through the PPP, so we made the decision that something of this importance is a worthwhile investment for the Bahamian people.

"We have made a decision to seek financing and be prepared, if we have to, to guarantee a loan from the Government level." The Budget documents also confirm that the Government's "equity contribution" to Freeport's new hospital, via the Grand Bahama Health Centre Development Company, will ultimately total $140m.

Some $5.515m will be invested in the upcoming 2023-2024 fiscal year, joining the existing $2.654m outlay, with a further $8m and $27m injected in 2024-2025 and 2025-2026, respectively. In addition to these equity payments, the Ministry of Health and Wellness will also be investing $3.485m, $6m and $10.455m over the next three fiscal years respectively in the Grand Bahama facility's construction.

Together, this year's "equity" and construction payments total some $9m.