Nashid defends ADK land lease, expresses concerns over Aasandha's unpaid dues

ADK Hospital Group's Chairman Ahmed Nashid, for the first time, spoke out in defence of the land leased to the company which many claim to be at a below market rate, and also expressed concern over the hospital's financial situation due to millions in unpaid dues by the government.

Nashid made these remarks at today's Public Accounts Committee meeting of the Parliament, where ADK's management was summoned to provide further details on a matter raised by the company.

The point of discussion surrounded ADK's concerns of escalating unpaid Aasandha fees owed by the government, which now sit in the millions, causing significant financial strain on the hospital, according to company.

Nashid said that while he understands that the committee does not serve the purpose of recovering debts for private companies, the issue was alerted to the committee as the public's interest also hangs in the balance.

According to Nashid, when the company wrote to the Public Accounts Committee in October of 2023, the state owed MVR 166 million to ADK. However, this sum stood at over MVR 200 million just two months later, in December, he highlighted. With such a high outstanding credit, Nashid said that they also wrote to the Finance Ministry.

This comes as the total outstanding dues now exceeds over MVR 251 million, he explained.

Nashid went on to say that the State pays outstanding fees at a rate of MVR 25 million per month, but that the monthly expenses incurred by the government at the hospital exceeds MVR 40 million. If this continues without being resolved, the state's debt towards the hospital will hike up to MVR 400 million by this time next year, he said.

"Twenty-five million Rufiyaa is not a sufficient amount. ADK Hospital's operating cost per day alone is MVR 1.5 million. Per month this goes up to MVR 45 million. Because of this, we're not able to make ends meet," Nashid said.

He went on to say that while the government's fees remain pending, due dates for payments that the company needs to pay to its suppliers and banks are also approaching.

Procuring necessary facilities required to provide services at the hospital is becoming difficult, he stressed with concern.

Due to these circumstances, the hospital has had to resort to arranging these funds from other businesses such as resorts run by the ADK group, in order to ensure uninterrupted services, Nashid said, explaining the company's situation.

With all this happening, the company is now in added pressure due to HSBC bank's decision to shut down operation in the Maldives in October of this year. Nashid explained that the company took funds from the bank to fill the gap of the dues unsettled by the government, but that the bank has now notified ADK to settle its dues to the bank before they conclude services in the country.

He went on to detail that the loans taken out by the company from various banks, to fill the financial gap created due to the government's non-payment, is at MVR 150 million, with another MVR 17 million due as interest.

Apart from this, the hospital's relationships with its suppliers are also being impacted, he said, revealing some suppliers of vital life saving drugs stocked at the ADK pharmacy have suspended their OD facilities due to delayed payments.

"Our concern is that someone's life may be jeopardised due to the lack of a life saving drug. It's gone to that stage [now]," he said.

ADK's proposed solution to this entire situation is for the government to increase its monthly payments to an amount over MVR 25 million, citing that their monthly operational costs are at MVR 45 million.

If this situation is not resolved, it would not be feasible for the company to continue providing its services, Nashid said, adding that it might reach a point where the hospital would have to stop offering Aasandha services as well.

"If there is no change, we'll have to discontinue some doctors and services," he said, pointing out that ADK stopping operations would be detrimental to the country's healthcare system.

Additionally, he also proposed ways for the government to reduce the prices of medical services being provided in the country as well.

Speaking on the company's finances, Nashid also addressed another pressing matter concerning the hospital - criticism by many that the land on which the hospital is built is leased below market rate.

Nashid defended its current lease agreement and said that he does not believe that the lease is a small amount, highlighting that the key beneficiary of the hospital's services is the government.

He revealed that the hospital pays MVR 8.2 million in lease payments for the land plot every year, which is USD 92 per square metre yearly. He pointed out that this rate is much higher that what resorts pay as lease, despite tourism being one of the biggest money makers for the country.

"The tourism sector is paying USD 8 for five square metres. We're paying USD 92," he said.

However, the government sold a 117,000 square feet land for a private hospital at MVR 58 million, he also pointed out, indirectly hinting at the land sold to develop Tree Top Hospital at Hulhumalé Phase 1.

"If ADK pays MVR 11 per the current [purchase] rate, the plot can be bought off in four years. If they have to pay the rent we pay, they will need to pay 16 years manually."

According to Nashid, the government's decision to lower the financial rent paid by resorts is based on the fact that lease payments are not the only source of benefit for the state.

As such, he highlighted that ADK also pays MVR 80 million annually on government taxes and other fees.

Chairperson of the committee Ahmed Saleem (Redwave Saleem) - agreed to the sentiments shared by Nashid.