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News • November 21 2004

No reaction or explanation to Lm45 million extra bill for Mater Dei hospital

Kurt Sansone

A parliamentary debate, rife with political rhetoric and cheap cat calls at the Opposition by key government ministers, on the agreement signed between Government and Skanska did not address the serious claims made by this newspaper last week that tax payers will be forking out an additional Lm45 million for the construction of the new hospital because Government caved in to Skanska’s demands during negotiations.
The agreement reached with Skanska on 6 November was hailed by Prime Minister Lawrence Gonzi as a victory. The agreement sets the cost of construction at Lm139 million and will see the hospital finished by 1 July 2007.
But figures presented in Parliament provide irrefutable proof the end result of the summer-long negotiations was nothing more than a victory for the Swedish consortium, which will end up with Lm45 million more in its pocket than the amount stipulated in the contract signed in 2000.

On Thursday neither Gonzi nor Parliamentary Secretary Tonio Fenech could say why they chose to benchmark their negotiated price with Skanska’s inflated projections (Lm161 million) rather than with what was agreed upon in 2000.
From official documents it transpires that since September 2003 Skanska were projecting a construction cost to the tune of Lm138 million. An additional Lm23 million was thrown in at the eleventh hour in what seems to be a negotiating ploy to up the price drastically before settling for the true amount they were expecting. The ‘victorious’ agreement indicates Government fell for this ploy.
According to the 2000 contract Skanska was to be paid Lm93 million for the construction of the hospital and the building had to be ready by June 2005. Clause 4.10 of the contract stipulated that Skanska was satisfied with the target value (Lm93 million) it gave government after a detailed pre-construction design brief for which the company was also paid Lm1.8 million.
Questions emailed this week to Parliamentary Secretary Tonio Fenech on various aspects of Government’s negotiating stand, remained unanswered. MaltaToday was instead referred to the parliamentary debate.
However, on Thursday Government did not say why it settled for Lm139 million and ignored the contract amount of Lm93 million. Government said nothing about the Lm5 million in penalties owed by Skanska for delays in the opening of the hospital and which were mysteriously forgiven after the new agreement was reached. Government did not say whether it will reclaim back the Lm1.8 million paid to Skanska for its pre-construction design brief, which according to the Gap Analysis report was flawed and far from “robust” in its conclusions.
Government’s feeble attempt to defend its negotiations was nothing more than a window dressing exercise to try and cloud people’s judgement over the issues at stake. When Mater Dei finally opens its doors on 1 July 2007, the Prime Minister’s 54 birthday, tax payers would have paid Skanska an additional Lm45 million for the hospital thanks to lack of control, incompetence and a weak negotiating stance.








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