| Country: Lesotho |
| Sector: Medical Waste Management, Urban/ Health |
| Name of Project: Health Care Waste Management Project |
| Contracting agency: Ministry of Health |
| Agency type: National government |
| Type of PPP: Management Contract |
| Contract term: Initial contract was for 1 year; renewable for a further 12 months. This has been recently renewed for another 8 months after completion of the first one year. |
| Construction period: There was no construction involved in this specific contract. The refurbishment of incinerators and other associated construction work was done as part of a larger program of refurbishment of 150 hospitals and Primary Health Care facilities in Lesotho undertaken by the Millennium Challenge Corporation. |
| Bid Parameter: Lowest lump sum annual payment (payments made monthly) |
| Total cost of project: - |
| Total Population served: The project caters to 2 hospitals and 15 Primary Health Care facilities in the three districts of Berea, Leribe, and Maseru. |
| Basic specifications: Licensing, accreditation requirements per contract/ relevant rules/ regulations |
| Stage of project: The contract was signed in October 2012 and the project is operational |
| Time taken for processing project from concept to contract execution: This was a different type of project and the time taken for processing was very short. IFC was retained as transaction advisor in February 2012, the RFP was issued in June 2012 and the contract was signed in October 2012. So, only a very brief period of 10 months was taken to process the project. However, it is relevant to understand that the processing was quick due to the following reasons: (a) This project was part of a larger hospital refurbishment project of the Millennium Challenge Corporation (MCC) (b) A lot of upstream work on the legislation, policy, regulations and standards was completed by the MCC by the time the project came to IFC for transaction related work (c) In addition, the MCC had also funded the feasibility studies for the project and most of the due diligence work required had already been undertaken (d) The government had already decided that this project was to be a PPP management contract and accordingly no time was lost in discussing these aspects (e) The government was keen on doing this early as they wanted this to be a pilot project that was to be used for collection of data on volumes of waste and other routine and day to day data and statistics; data from this would in turn feed into a larger PPP envisaged for collection of waste from all the 150 refurbished hospitals and Health Care Facilities. |
| Local or foreign investor: Consortium consisting of local and foreign investor; Mediwaste with equity participation by Ditau Health Solutions and Matsete Investments |
| Applicable legislation: HCWM Bill of 2008; HCWM Policy, HCWM Regulations, Environmental Act 2008, Water Act 2008; National Standards on Health Care Waste Management. |
| Approving authority: Government of Lesotho |
| Is the approval process the same as for other projects: Yes |
| Role of Private Party: Collection, transportation, treatment, incineration and disposal of health care waste, operation of incinerators; routine maintenance of the new vehicles and fuel for the vehicles were to be the responsibility of the private party; the private party also needed to inform the government within the given time frame in case of break down or other repair and maintenance requirement for the incinerators. |
| Role of Public Authority: Setting standards and specifications, monitoring and verification of performance and contract management, making payments. In addition, in this case, a slightly different system was followed in terms of the purchase of disposables, as well as some of the operational and repair costs. For example, the government is responsible for supply of bags for waste collection. This was done as the MCC had already supplied bags and some other material required for the project in advance to the government. In addition, while one incinerator in one of the District hospitals was in good condition as it had been recently refurbished, the second one was not in new condition. Given this, the private sector was not keen to take the responsibility for the costs of parts and repair. So, the repair and maintenance is the responsibility of the government. This had potential for problems. When the bags supplied by the MCC, which were with the MoH, were fully consumed, the MoH had to buy new bags and procurement of these took some time and there were associated delays. The vehicles for carrying waste were already supplied by the MCC. |
| Financing:, Equity and debt by private provider; there was no capital investment by the private sector |
| Payment Mechanism: Payments made by the Department of Health in equal monthly installments based on an annual lump sum fixed by bid |
| Tariff: There are no tariffs associated with this. While there are private hospitals/ health care facilities in Lesotho, with about a 50:50 ratio of government and private facilities, most of the private facilities are owned by faith based organizations that are subsidized by government. These establishments run mostly on no profit basis and, therefore, may find tariffs for health care waste disposal unaffordable. The government, therefore, decided that while waste from these facilities would be taken to the designated district incinerator for disposal, they would not be charged for it. |
| Comparison to existing rates: Not applicable |
| Government Support: The Millennium Challenge Corporation has been working with the Government of Lesotho in the area of medical waste for the last many years and has helped in the development of upstream policy, regulations and standards and a state-of-the-art plan for safe disposal of hazardous waste, apart from refurbishment of the hospitals and health care facilities; this management contract is currently fully paid by government. |
| Other advantages: The data generated from the project is likely to set the tone for the program of health care waste management in the country |
| Contingent liabilities created: Fiscal commitments are created as government has undertaken to make monthly payments through contract period. However, it is learnt that there are budgetary issues and government is likely to find it difficult to either continue the program or apply this pilot to the rest of the health care facilities as envisaged earlier. |
| Risks: Payment risk, performance risk |
| Level of risk: Moderate payment risk |
| Key risk mitigating features: Demand risk is fully borne by government through fixed payment |
| Factors affecting decisions on the size of project or population serviced by the project: The project was taken as pilot to inform the next phase of work in this area involving all health care facilities. |
| Lessons learned: • The project reduced disposal of medical waste on general landfill sites, introduced segregation and proper handling of waste in the 2 hospitals and 15 health care facilities included • Upstream work on legislation, policy and standards can considerably reduce time taken to process projects from conception to signing of contract • Capital investment by government in facilities appears to be the only solution where a commercial market/ demand for medical waste disposal services on payment basis does not exist • Bifurcating the supply of disposable material and equipment; and the repair and maintenance work from the management contract might affect private provider performance given that it will be impacted by any delays on the part of the government authority responsible; it has the potential to reduce the efficiencies associated with such contracts • The fiscal capacity of government to stick to the payment commitments is of immense importance in such projects and where adequate fiscal space is not available it may not be possible to apply the results of the pilot to the sector • Also capital investments might go waste if there are few funding options for continuing work of operations and maintenance |