SINT MAARTEN (POND ISLAND) - During the Council of Ministers press briefing on Wednesday December 5th, Minister of Public Health Emil Lee elaborated on the discussions that have started in the media regarding the new St. Maarten General Hospital, the Italian contracted construction company INSO and the implications of the financial circumstances of its parent company Condotte.
Lee confirmed that both INSO and Condotte are not bankrupt and have not filed for bankruptcy. “The hospital project is going ahead, it is going to be built. It may suffer a delay – but it is going to be built.”
“The new St. Maarten General Hospital and by extension SMMC, has not lost one guilder as a result of the issues between Condotte and INSO. Not one guilder has been lost! The project is well put together, with proper safeguards and we will proceed with construction only once everyone is confident in the security of the project moving forward.”
The project is organized in phases, for example: planning and design. This phased execution enables all parties to review the steering/adjustment points and compare progress with the contracted objectives. “I actually see it as a blessing that this is happening now and not when we have already started with the construction phase of the new hospital.”
The project managers, the SMMC, the Ministry of VSA and all the financers, in consultation and with coordination by the administrative and security agent for the lenders, the NIB, have decided to not issue any payments to INSO until clarity has been established. Lee stated “When we look at the agreement with INSO, they have defaulted on their contract. We have requested clarity from INSO, so that they can prove that they still have the financial capacity to perform on the contract.”
“I am in direct contact with the administrator in Italy. He is well aware of the situation. His job is to preserve the value of the company. The value of the company is determined by the contracts that they hold. He has an incentive to make sure that all the contracts that are currently in-house with INSO are maintained. So he has every incentive to find a way to make the project work. Keep in mind that he is administering a company with 1.3 Billion Euro in turn-over, so it is going to take a little bit of time, but we are on top of it.”
The hospital project is currently in the phase where preparation of final drawings for the construction of the building are being finalized, the requirements for the site conditions are being worked on; topographic and soil samples are being taken and two mock-up rooms have been built for SMMC staff testing. These two rooms have been built “to size” in order to ensure that the planned procedures can be carried out in these rooms. Sizes of doorways & bathrooms, the flexibility of moving beds ‘in and out’ of rooms, etc are all being tested in order to provide feedback for the design criteria. Currently, the reinforcement and repair project of the current SMMC, funded by the World Bank is ongoing and will continue.
Lee addressed recent comments made in the media pertaining to the role of the NIB and ENNIA and stated: “To be clear, ENNIA is not a financer of the hospital. No portion of the ENNIA group is financing any part of the hospital. The NIB offers a service! They are an administrator that coordinates between the lenders. Their role is to coordinate. To synchronize and communicate; to regulate the agreements that all the lenders have come with.” Lee continued to elaborate that, as part of the project process, there was also a tender for the administrative and security agent service that took place, which the NIB won in December 2017.
“In the event that INSO cannot fulfill the contract, all the funding is in-tact. All the documentation, the drawings, the permits are owned by the SMMC. All monies paid for contracted services to this point, have been delivered. In the event that INSO cannot perform on the contract, we issue a new bid for the construction and maintenance portion of the project.”
The financial circumstances surrounding Condotte is recent and the project team was informed. With this knowledge, the team actively addressed the matter by conducting evaluations and consultations, including with international advisors. At the time, the financial turbulence of Condotte did not pose a threat to INSO and the project execution. “Let us remember that the contract with INSO was signed in 2016.” As of recent, just before the scheduled groundbreaking of December 3rd, INSO informed that they may be impacted as a result. With this knowledge, as stated before, it was agreed upon by the SMMC, the Ministry of VSA and the lenders that no funds would be released to INSO until clarity has been established.
INSO’s parent company Condotte, has been operational since 1880 and has an annual turnover of 1.3 billion euros. The extraordinary administration filing of Condotte is the result of something that is happening in the construction sector in Italy. Condotte is part of the top Italian construction companies, ranking in at number 3, along with Astaldi – number 2 and Trevi – number 6. All three of which are under extraordinary administration. “It is a process that allows for Government to step in and take over the management and decision making of the companies and properly restructure the debt of the companies.”
Recap of new hospital project process to date:
Lee gave a brief recap of the project process for the new St. Maarten General Hospital and which phase the project is in now. “I want to give a recap of the process of how we got here today. Why is it significant? Because process matters; why and how you execute a project matters.”
- The scope and the requirements of the project were established in a Tripartite setting between the Ministry of VSA, SZV and the SMMC. “The work that has been done in terms of determining the requirements, the scope and everything of the hospital stands in good order.”
- Before the bidders were allowed to submit an official bid for the build and maintenance of the new hospital, they had to undergo a pre-qualification and selection process. This process consisted of a review of their financial and technical capabilities as well as the capacity to manage the project. “INSO obviously went through this process and passed the review.”
- As part of the due diligence process of the World Bank in order to grant funding to the SMMC, the entire process for the bidding for the new hospital was also reviewed by the World Bank. “They put the entire procurement process under review and they came out with a positive advice on how the process was executed.”
- Further due diligence was executed by the project management team, having visited the hospital in St. Lucia which was constructed by INSO. This was in order to review the quality and execution of the project.
- The contract with INSO was signed in September 2016, between INSO and SMMC.
The groundbreaking event of December 3rd, was planned and scheduled months in advance, with the planning and anticipation that several steps/phases were to be completed. Some of these steps were:
- The preliminary design required for the building permit – completed and approved.
- The building permit request – completed and granted.
- Meeting the ‘Conditions Precedents’ requested by the financiers, the lenders of the project. The financers agreed to the funding of the project and outlined a list of conditions to be met before releasing funds to the project. The independent consulting engineer contracted by the lenders verified to the project managers that this process is on track.