Medical Supplies Authority tenderpreneurs to lose Sh5.5b
Suppliers of Covid-19 Personal Protective Equipment (PPEs) to the Kenya Medical Supplies Authority (Kemsa) will not be paid Sh5.5 billion.
Kemsa’s acting Chief Executive Edward Njoroge told MPs yesterday that there was no money to pay the suppliers.
Appearing before the Health Committee of the National Assembly, he also revealed that PPEs worth Sh790 million had since expired.
“The expired items were part of the consignment that was supplied when the pandemic struck,” Njoroge said adding “We received approval to dispose of the commodities but we were not told to pay the suppliers.”
He added: “In any case we have no money to pay the suppliers. No money has been set aside to pay them.”
Another parliamentary committee has also directed the state-run medical procurement agency not to pay a penny to suppliers accusing them of benefiting from irregular tendering process.
The Public Investment Committee (PIC) wants all the companies to be investigated on how they won the tenders before any payments are considered.
PIC has also recommended that the companies that were paid nearly Sh4 billion, in samples and initial supplies, refund the cash to the government.
Only two companies were found to have followed the law in the procurement of the Covid-19 response items with the rest using commitment letters.
“Harleys Limited and Nairobi Enterprises Limited that insisted on following the procurement law were left out in the payment,” the report reads.
Asked by the committee’s vice chairman Joshua Kutuny what will happen to suppliers who had done genuine business with the authority, Njoroge said matters of irregular tendering had not been addressed.
“Although the Cabinet has approved the sale of the PPEs, we will not use the money to pay the suppliers,” Njoroge told members.
He said the authority had entered into an agreement with the Council of Governors (CoG) to sell the PPEs to county governments at the current market price.
He, however, said some of devolved units had protested that the prices were a bit high and wanted a review.
“We have been in talks with counties and hospitals who have expressed their willingness to buy the PPEs. Already 35 counties have purchased their first batch,” Njoroge revealed.
Responding to a question by Keiyo North MP James Murgor as to whether the authority had set the time lines as to when the PPEs should be disposed of, he said he had set the deadline for December 31.
He told members that currently, the authority was holding 3,000 PPEs in its stores.
A forensic audit done by the Ministry of Health showed that Kemsa may accrue a loss of Sh2.33 billion if the products are sold at the current market price.
Kemsa is stuck with Covid-19 stocks worth Sh7.6 billion that were purchased at exorbitant prices at the onset of the pandemic.
Yesterday, Njoroge told the committee that the authority will be putting a request to Parliament to allow Semi-Autonomous Government Agencies (Sagas) which include parastatals to buy products from them to improve its financial base.
He added that the authority was in the process of reviewing the procurement procedures to align them with the law.
Loopholes in the process were used to issue tenders in the infamous Kemsa scandal, where suppliers used commitment letters to win tenders.
When he appeared before the Health Committee early this year, Health Cabinet Secretary Mutahi Kagwe said he had given Kemsa authority to sell the items at the current market price.
He said at the time that a loss would be incurred and that Kemsa had no option other than to sell the items at the current market price.
The approval by the Cabinet to allow Kemsa to sell the PPEs came as a relief to governors who have been grappling with limited equipment supplies for public health workers handling Covid-19 patients, especially when the country was at the peak of the pandemic.
Ethics and Anti-Corruption Commission (EACC) has since stopped Kemsa from making any payments to suppliers until investigations into the procurement of Covid-19 items worth Sh7 billion is concluded.
The authority remains under probe by lawmakers and investigative agencies over alleged malpractices in the purchase of the protection gear.
Kemsa has since admitted that most companies awarded tenders were neither pre-qualified nor in their database.
The authority has a monopoly in procuring medical products and technologies for state agencies and counties, with procurement in the neighbouring countries also public-driven.