The Gozo General Hospital has effectively been privatised for 99 years and not just 30, as the government has repeatedly declared, this newspaper can reveal.
The Gozo hospital, including all its grounds and surrounding roads, has been transferred to Vitals Global Healthcare Assets Limited in a public-private partnership that is based on what the government said was a 30-year lease, signed last March.
Unpublished documents seen by The Sunday Times of Malta show however that a clause in the contract gives the company the right to extend its emphyteutical grant by a further “single and additional term of sixty-nine years”.
The government has renounced its right to decide whether to extend the contract after 30 years, this newspaper is informed.
This means that the hospital, a major public asset, can be taken over for a total of 99 years, expiring in 2115, on the sole discretion of Vitals.
In the deal between Malta Industrial Parks Ltd and Vitals, negotiated by then health and energy minister Konrad Mizzi, a total of 72,880 square metres of land in Gozo, including other buildings besides the hospital, will cost Vitals €2.15 per square metre in ground rent per annum.
If the company chooses to retain the property for a further 69 years, the ground rent will rise by 0.64 cents per square metre, and go up again by five per cent every other five years.
Health industry sources told The Sunday Times of Malta that the deal was “totally skewed” in favour of Vitals.
“We really cannot understand how the government did not at least retain the right to decide whether to extend the agreement after the 30-year period. Instead, this decision will be made by the private company and the government has no say on a matter dealing with its own public property.”
When asked to clarify how long the hospital will be in the hands of the private company, the Health Ministry insisted it was for 30 years.
“As stated in the press briefing last week, the concession agreed by both parties is for 30 years,” it maintained.
Vitals also won the concession for St Luke’s and Karen Grech hospitals in Malta. It is not yet known whether the same arrangement has been made in regard to these properties.
All documents related to the hospital deals have so far been kept under wraps. Pressed to publish the full contracts, the government said it would only do so next November.
The deals give Vitals full control over the management of all three hospitals.
The company will invest about €220 million to build a new 450-bed hospital in Gozo and refurbish the two Maltese hospitals, creating 320 beds in Karin Grech and another 350 at St Luke’s.
Although some of the beds will be used for medical tourism, the bulk of the company’s profits will be coming from Malta’s public coffers as the government will be ‘hiring’ most of the beds and related medical services to be used by Maltese patients.
Vitals is expected to be paid tens of millions a year by the government but no details have so far been released on the commercial aspects of the deal.
Last week, Health Minister Chris Fearne said that payments to Vitals will not exceed the amounts the government is currently paying to run the three public hospitals.
Asked to state the current cost of the three hospitals, the ministry did not reply.
Vitals is owned by Bluestone Special Situation 4 Ltd, a company registered in the British Virgin Islands. It is relatively unknown in the health industry.
MINISTRY OF HEALTH REACTION
In a reaction, the Ministry of health said:
"It is not true that government has renounced its right to decide whether to extend either the emphyteutical concession or the service concession for Gozo General Hospital beyond the agreed 30 years. As stated publicly, the concession was granted for a period of thirty years.
The public deed provides that government may demand the reversion of title to Gozo General Hospital and Karin Grech Rehabilitation Hospital from the concessionaire in its favour, and Vitals may then only exercise the option to extend the title with respect to St. Lukes Hospital, the latter being intended to be mainly developed for medical tourism.
The statement that Gozo General Hospital “can be taken over for a total of 99 years, expiring in 2115, on the sole discretion of Vitals” is therefore based on a blatant misreading of the published notarial deed.
The anonymous “health industry sources” quoted by the Sunday Times of Malta are likewise misinformed.
The article also refers to the ground rent payable by Vitals to Malta Industrial Parks. The Request for Proposals had specified that a ground rent of €11.65 per annum per square metre of the built-up area after the completion of the redevelopment programme would be due by the chosen concessionaire. On the basis of Vitals’ bid for redevelopment, this was calculated at €525,000 per annum for the three sites allocated by government.
Should government allow, at its discretion, the continued occupation of the sites beyond the agreed thirty-year period, the ground rent would then increase by 30%, and further increase by 5% every five years.
Agreements on the Public Private Partnership will be published in November."