Tread  carefully

Tread carefully

WE are not surprised that the government is moving to terminate Tšepong Pty (Ltd)’s contract to manage the Queen ’Mamohato Memorial Hospital.
This has been a long time coming. Relations have soured since 2011 when the hospital opened its doors. The government has been complaining about Tšepong’s charges which it claims were gobbling a disproportionate chunk of the health budget.

Tšepong’s gripe is that the government has repeatedly failed to settle its bills on time and failed to meet its contractual obligations.
The crisis triggered by the nurses’ strike should thus not be seen as the main reason for the government’s move to pull the plug on the deal.
It just presented the government with an opportunity it has been seeking for several years. The intention has always been to find a way out of the contract.

Yet it will be foolhardy to celebrate the move.
Such drastic decisions have consequences for both the government and Basotho.
First, we doubt the government can efficiently run the hospital.
It’s poor performance in the state hospitals and clinics is not a secret. It’s the same with other government institutions and companies.

Second, it is highly unlikely that the government will find reputable hospital groups to take over the facility. What has happened to Tšepong will certainly scare off those who might want to come in. Third, this is not only about Tšepong, the private company.
There are banks and funders involved in the contract. The government will have to pay off hundreds of millions borrowed to build the hospital.

It is also likely that Tšepong will push for a hefty settlement to cover the remainder of the contract. How to untangle the deal will be a nightmare for the government.
Fourth, Tšepong will not go without a fight. There is so much money at stake to just walk away. Besides money, there are also reputational issues to be considered.

Netcare, one of Tšepong’s shareholders, is not known for shying away from court battles. The government should thus get ready for a monumental battle.
Since the nurses’ strike started the government has been at pains to blame Tšepong for the crisis. What it however doesn’t say is that it too played a significant role in creating the disaster.

Last night the government said Tšepong had violated the terms of the contract. That may be true but Tšepong too has a long list of the government’s transgression.
What is clear is that we are now in unchartered waters. That is why we hope the government has been properly advised before making the decision.

Whatever the advice, it must tread carefully because this is going to be one heck of a battle. There are serious financial, political, social and diplomatic consequences to be considered.

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