Kamchatka is Reprimanded for Dragged-Out Construction of Hospital

Kamchatka is Reprimanded for Dragged-Out Construction of Hospital
Construction of the regional hospital on Kamchatka, a 1,250 kilometres long peninsula in the Russian Far East, is underway for ten years. During this time the foundation and metal scaffoldings of the structure have been built at the site of the future hospital. In February 2020, deputy prime minister Yury Trutnev issued the last warning to the authorities of the Kamchatka territory, demanding construction to be completed as soon as possible.

Discussions of the necessity of building a regional hospital in Kamchatka started back in 2009-2010. At that time, the regional authorities stated that the existing hospital had grown obsolete, and it was practically impossible to transport patients to mainland parts of the country. "Harsh climate determines the specificity of the spread of diseases here. Since 2000, the number of cases of respiratory, blood circulation and nervous diseases has been increasing," Kamchatka officials said at the time. For the hospital construction, a land area of 41 ha near the regional capital city of Petropavlovsk-Kamchatsky was allotted. In the autumn of 2011, technical documentation was drafted. At that time, construction costs were estimated at 8.5 billion rubles ($126,234,350). The money was to be received from budget allocations for the federal program ‘Development of the Far East and Transbaikal Area’, but the project didn’t get started. In September 2013, Vladimir Ilyukhin, the governor of the Kamchatka territory, said that the hospital would be built within three years with assistance from a Russian bank. However, within a year the regional Health Ministry said that in a best-case scenario, the construction might be completed by the end of 2019 if at least 11 billion rubles ($163,362,100) were spent. At the same time, both the federal and regional budgets were ready to partially allocate the money. Simultaneously, the search for an investor began.

In 2014, local authorities held the first bidding contest but Kamchatzhilstroy, which had already received 124 million rubles ($ 1,841,536.4), declared bankruptcy and stopped the construction works. In 2016, there was another bidding contest: OOO Master laid a foundation strip and built metal scaffolding, for which a total of 199 million rubles ($2,955,368.9) was received from the local budget. It should be noted that, in fact, these are the only construction works that the site of the future hospital has seen so far. In May 2017, a new bidding contest totaling 628 million rubles ($ 9,326,490.8) was held. OOO Gask had the winning bid. But already in February 2018, the contract with the company was terminated. In 2019, it was declared bankrupt.

At the same time, the regional authorities tried to find another way of solving the issue – by bringing in an investor. In 2017, a cooperation agreement was signed with the Korea Healthcare Development Institute. However, representatives of the company never filed an application for participation in the concession. In 2018, an auction for a concession agreement on construction and operation of the hospital for a period of 14 years was announced. The investor would have to contribute 14.6 billion rubles ($216,826.06). Plans suggested that a diagnostic and treatment unit with the floor space of 18,000 sq. m would be built. It would have nine surgery theatres, resuscitation, rehabilitation and hemodialysis departments, a laboratory and a helicopter pad, two in-patient departments with 175 and 275 beds with a total area of 22,000 square meters, as well as an outpatient department and an anatomic pathology unit building. In 2022, the construction was due to be completed. In addition, the concessionaire would commit to provide for high-quality medical services to the residents of the Kamchatka territory.

In 2019, it became clear that Kamchatka Medinvest, a subsidiary of the Rostec state corporation, had won the bid. In August 2019, during a meeting on the economic and social development of the centers for economic growth in the Far East, Gov. Ilyukhin reported this fact to the then prime minister Dmitry Medvedev. He noted that the hospital was 14 percent complete. According to sources in the regional government, at the same time, Kamchatka Medinvest got 5 billion rubles ($74,255,500) upfront.

In February 2020, the Kamchatka territory was visited by Yury Trutnev who reminded the local authorities that in December, they were already instructed to find out why the construction of the regional hospital had not begun. He also underlined that in 2018 alone, 4.2 billion rubles ($ 62,374,620) were allocated for the project from the federal budget, and in 2019, about 1.4 billion rubles ($20,791,540) were revoked to the budget, since the planning documentation on the project was absent.

"Kamchatka’s Ministry of Health and Ministry of Construction mention the time period of three months in order to prepare project documentation, which envisions several stages of construction,” said Trutnev. “I hope that finally we will start the works." Speaking of the problems that have been hindering the implementation of this project for almost 10 years, Trutnev called the construction costs per square meter excessive – 147,000 rubles ($2183.11), exclusive of the cost of equipment. He noted that since President Putin will have to be asked for additional funds to complete the construction, it is necessary to justify why the project is, on a conservative estimate, twice as expensive as similar ones in the regions with practically the same problems. "How will we turn [to Putin] with the amount of 147,000 rubles? He (Russian president) will ask us a simple question, why only 147,000, and why not 300,000 then?" Trutnev said sarcastically.

It is noteworthy that during the trip to Kamchatka Trutnev offered Ilyukhin to dismiss the entire economic department of the local administration. When asked about running for the third term, Ilyukhin gave an evasive answer -- he recommended asking the residents of the territory. It is worth recalling that according the State Council-2 political stability index of regional governors compiled by the Minchenko Consulting company, Ilyukhin is in the so-called "red zone" – that means, his dismissal is highly likely. Experts of the St. Petersburg Politics Foundation predicted that Ilyukhin would be removed from the post in December 2019 even before his term of office expired in autumn 2020.

"Despite the predictions of my colleagues, I would venture to suggest that Ilyukhin's popularity is quite high,” political consultant Alexey Kamchatny said in an interview with wek.ru. “If he is allowed to run for a third term, he is likely to win. The question is how the federal government will react to all the negative stuff in the news related to Kamchatka. The scandalous uncompleted construction project of the regional hospital is only the top of the iceberg. There are a lot of problems in the sphere of healthcare: the shortage of doctors, the low quality of services and the deficit of medicines. Bringing all these facts together, the situation might become tense at the social level. However, despite these and other sore spots in his governorship Ilyukhin feels at ease,"

According to the Telegram-channel named Podpolye Kamchatki (the Underground of Kamchatka), Ilyukhin's dismissal was expected in mid-December but the governor tried to keep his position at least until March. Apparently, this was due to the fact that in February there will be another bidding contest for the distribution of budgetary funds allocated to continue construction of the regional hospital. OOO Master is in the list of the most likely winners, as it is allegedly affiliated with the incumbent governor Ilyukhin.

During the press conference, Ilyukhin told reporters that since the hospital is planned to be built in stages, the first stage will require 2.6 billion rubles ($ 38,771.2). However, there is no decision on allocation of money at the federal level yet. As much as 9 billion rubles ($133,659,900) out of the total of 14 billion rubles ($207,915,400) is expected from the federal budget. The governor explained that in order to get the allocation of federal money the Ministry of Health and the Ministry of Construction should coordinate their efforts. "The issue of the allocation of funds was postponed until March,” explained Ilyukhin. “When the decision on allocation of these funds is made, the process of issuing a regulatory act of the Russian government will be launched. The act will aim to determine a single service provider – a company that will build the hospital. From that moment on, we have to count down 36 months and then, in accordance with the project terms, we will have this facility completed.”