Maseru – Queen Mamohato Memorial Hospital (QMMH), also known as Tšepong, faces potential closure due to an overwhelming debt of M223 million. This financial crisis has sparked concern for the country’s healthcare system.
A default judgment was issued against the hospital on May 21, 2024. This judgment highlighted Tšepong’s failure to service its substantial debt, leading to calls for its liquidation. The hospital’s main shareholders, Net careHospital Group and its service provider, Botle Facilities Management, claim that Tšepong owes them M223, 572,452.14. They have since filed a petition with the High Court’s Commercial Division, seeking the hospital’s liquidation to recover the debt.
Net care holds a significant 40 percent stake in the Tšepong consortium, a partnership with the Lesotho government established in 2011. The consortium includes other local shareholders: Afri’nnai Health (20%), Excel Health Services (20%), Women Investments (10%), and D10 Investments (10%). The partnership aimed to design, build, and operate QMMH, which quickly became a vital healthcare institution in Lesotho.
However, the partnership has since been terminated by the Lesotho government, which accused Net care of exploitative practices. This termination has intensified the financial woes of Tšepong, pushing it toward insolvency.
In their petition, Net care and Botle Facilities Management argue that Tšepong is insolvent and unable to pay its debts. They have requested the court to appoint Chavonnes Badenhorst St. Claire Cooper as the hospital’s liquidator. According to Net care’s general manager, Christoffel Smith, the hospital’s insolvency and significant debt necessitate liquidation to settle its obligations.
The legal basis for the liquidation request is grounded in Section 125 of the Companies Act, which allows for a company to be liquidated if it is unable to pay its debts or if it has lost a substantial portion of its share capital. The court is set to hear the application on August 6, 2024.
The Lesotho government initiated a tender in 2007 to replace the aging Queen Elizabeth II Hospital. By October 2008, a contract was signed with the Tšepong consortium to design, build, and operate QMMH and its adjacent clinics. The project, with an estimated capital cost of M1.165 billion (US$84 million), aimed to significantly improve healthcare delivery in Lesotho.
Construction was completed within two years, followed by a 16-year operational period during which Tšepong was responsible for maintaining the facilities and managing all clinical and non-clinical services. The government agreed to pay Tšepong an annual unitary fee of M255.6 million (US$18.4 million) to cover operational costs.
Despite these arrangements, financial disputes have plagued the consortium. Net care claims to have repeatedly bailed out Tšepong due to the government’s failure to pay its debts on time. Net care alleges that other shareholders did not contribute financially, leading to further discord within the consortium.
The potential liquidation of Tšepong poses a severe threat to Lesotho’s healthcare system. As the country’s primary referral hospital, QMMH plays a crucial role in delivering healthcare services. The hospital employs around 900 staff members and serves over 700,000 patients annually. Its closure would disrupt medical services and place additional strain on an already challenged healthcare system.
The government’s decision to terminate the PPP agreement with Net care in August 2021 stemmed from concerns over the contract’s financial burden, which allegedly consumed half of Lesotho’s health budget. This decision has intensified the financial instability of Tšepong, leaving it unable to fulfil its financial obligations.
The ongoing legal battles and financial disputes within the Tšepong consortium have further complicated the situation. Local shareholders, who command a combined 60 percent shareholding, have opposed Net care’s efforts to recover M1.6 billion from the government, arguing that they have not received any dividends despite significant government payments for the hospital’s services.
These shareholders accuse Net care of siphoning off funds without proper distribution among all parties involved. This internal discord has contributed to the consortium’s inability to effectively manage its finances and meet its obligations.
As the court date approaches, the future of Queen Mamohato Memorial Hospital hangs in the balance. The hospital’s potential liquidation could have far-reaching consequences for healthcare delivery in Lesotho. The government, healthcare professionals, and the public await the court’s decision, which will determine the fate of this critical institution.
The outcome of this legal battle will not only impact the hospital’s creditors but also shape the future of healthcare services in Lesotho. The need for a resolution is urgent to ensure that the country’s health system can continue to provide essential services to its population.
