Speaking from the veterinary perspective, this procedure is commonly done on male dogs who get an unclearable blockage of the penis due to bladder stones that get trapped in the urethra. The penis is removed, and a urethral diverticulum placed behind the testicles as this the most superficial place beneath the skin the remaining internal penile structures pass. (Feel for yourselves, guys; if you press just below your testicles, you can feel the root of the penis. A small incision placed immediately on the midline will open up the urethra and voila, instant pee-hole.)
I'm guessing this guy either had a deformed penis, or had it so badly damaged that it wasn't worth saving, and reconstructive surgery likely was too expensive, so the cheaper amputation and pee-hole option was undertaken.
