Developers net millions from hospital ‘lab’ project

The Sentinel has learned that the cost of the project to the Western Trust has been revised upwards due to the rising Retail Price Index (RPI).

Recently, the paper reported how the United Healthcare Land Company Ltd. was set to earn £40m for its help in financing the new lab.

The Stormont Public Accounts Committee (PAC) were advised that the company would get £1.6m every year from the Western Trust until 2032 when the 25 year Private finance Initaitve (PFI) contract ends.

However, it’s now been revealed that the annual repayment for 2012 was over £300k more than the £1.6m agreed in 2005. That’s because prices have been rising, according to the Western Trust.

But that means the United Healthcare Land Company Ltd. will now be paid at least £58.9m over the next two decades from the public purse.

That’s a profit of £43.7m after its initial investment of £15.2m and maintenance costs at the lab for which it is repsonsible.

In a statement released to the Sentinel a spokesperson for the Western Trust said: “The Northern Ireland Audit Office issued a report in September 2008 on the PFI Laboratory and Pharmacy Centre at Altnagelvin which reflected a positive outcome for the PFI scheme.

“The report was presented to the Public Accounts Committee in October 2008 and the Trust was commended by the Committee on the management of the project.”

The spokesperson continued: “In relation to the Trust repayment of £1.981m in 2012, this was the unitary payment for that year. I would refer you to note 1.16 of the accounts for a full explanation of accounting for PFI transactions.

“In particular please note that the annual payment is separated into the following component parts: payment for the fair value of services received; payment for the PFI asset, including replacement of component parts; and payment for finance (interest costs).

“The amount of £1.6m relates to the agreed amount at the start of the contract in 2005 which increased due to Retail Price Index (RPI) adjustments by 2012.

“The figure of £1.981m is modelled on RPI as at that date and future unitary payments will increase or decrease dependent upon movements in RPI.

“Based on the current level of RPI it is expected that total unitary payments over the lifetime of the contract are envisaged at an amount of £58.9m.

“Please note this is the total unitary payments and includes over and above the repayment of the capital costs amounts to cover lifecycle and full maintenance costs as well as inflationary adjustments in line with the agreed contract.

“The amount of £15.225m included in the accounts is the amount of commitment under PFI for this scheme, and will reduce annually as the contract proceeds and repayments are made.”

Compare this with what a sitting of the PAC was told back in 2007: “The construction of the Centre, which cost £15.2 million, was funded through a PFI.

“This will be repaid by the Trust over the 25 year term of the partnership Agreement through annual payments of £1.6 million; these payments will also cover the operation and maintenance of the building over the term of the Agreement. A further £3.1 million was also invested by the public sector in providing a range of specialised equipment for the Centre.”