Fresh details as CS okays sale of Sh6bn equipment

Thursday, November 12th, 2020 00:00 |
Health Cabinet secretary Mutahi Kagwe. Photo/Gerald Ithana

Hillary Mageka and Mercy Mwai 

Fresh details emerged yesterday regarding Kenya Medical Supplies Agency (Kemsa) management awarding of tenders to companies that approached them, yet no formal advertisements had been issued.

The companies approached Kemsa to provide them with the tenders to supply Personal Protective Equipment’s (PPEs), MPs heard.

Members of the National Assembly Public Investment Committee (PIC) chaired by Mvita MP Abdulswamad Nassir, were shocked to learn that without doing any technical and financial assessment to ascertain whether the companies were capable of delivering the PPEs, Kemsa went ahead and issued offer letters.

Acting Kemsa Chief Executive Officer Edward Njoroge admitted before the legislators that at that time, the agency had not done any assessment to determine the demand, neither did they engage their customers who included the county governments and other Level Six referral hospitals, to establish whether there was a ready market for their commodities.

“The only approval we had was the one relating to the expenditure of Sh758 million which was a funding from the World Bank as this was approved by the Ministry of Health Principal Secretary Susan Mochache,” said Njoroge

Njoroge told the MPs that the parastatal’s actions saw 97 per cent of their equipment worth Sh6.3 billion lying idle in their warehouses, as they cannot be disposed at the current prices as the cost of buying them was high.

Njoroge further told the MPs that currently,  they are not able to pay the suppliers, as they have no money adding that Ethics and Anti-Corruption Commission (EACC) has also barred them from paying for the equipment as the matter is under investigations.

To salvage the situation, Njoroge said their only solution is to sell the PPEs at a lower price, which will lead to a Sh2 billion loss.

His sentiments came hours after Health Cabinet Secretary Mutahi Kagwe who separately appeared before a Senate committee said he had directed Kemsa to sell PPEs, masks and other supplies to county governments at the market price.

Appearing before the Senate Health committee to respond to concerns on NHIF and private insurance firms refusal to cover Covid 19 related expenses, Kagwe said the move will save taxpayers the risk of losing Sh2 billion from the purchases done at exorbitant prices when Covid-19 first struck.

Exorbitant prices

“I have written to Kemsa and instructed them to distribute PPEs and masks at the current market rate instead of holding them because the people in the counties and elsewhere lack them,” the CS told the House committee chaired by Trans Nzoia Senator Michael Mbito.

“We have also asked the counties to get PPEs and masks that they may require direct from Kemsa and which will deducted against their accounts,” he added.

The bulk of the PPEs and masks, which is a subject of investigations by EACC were among the items Kemsa acquired at exorbitant prices only for the market cost to drop months later.

However, Narok Senator Ledama olekina asked Kagwe to disclose who would take the responsibility for the loss to be incurred by the taxpayers for goods purchased at higher prices.

 “Tell me how you are going to handle that loss of public funds,” he asked.

But the CS defended his position saying that at the advent of the pandemic, the cost of the commodities was higher because they were scarce.

He gave an instance where he was forced to borrow about 300 PPEs from the Aga Khan University Hospital.

At the time, Kagwe said that Kemsa bought all the items at the prevailing global prices then.

He further explained that the prices of the PPEs dropped to between Sh4,000 to Sh5,000 when they started manufacturing them locally.

 “Because of the pandemic, every single business is going to take a hit, whether we like it or not. 

“KRA is not going to collect the same revenue they did in 2019, even if you are a landlord you are going to take a hit, because the amount you charged as rent last year, you are not going to charge the same because it is no longer applicable.

You must take a hit and reduce your rent,” the CS held. “Whether we like or not, Kemsa is going to take a hit alongside other institutions because we are not going to somehow pretend that Kemsa recovered all the monies,” he added.

Sent packing

The CS argued that there is no reason why Kemsa should not sell now at a loss of between 40 per cent and 50 per cent instead of waiting for next year and take a hit of 90 per cent.

While denying there was any cover up at Kemsa, Kagwe said his decision to direct the drugs agency to clear its stock does not in any way amount to micromanaging them.

Kemsa is said to have procured N95 (1860) masks at an outrageous price of Sh1, 300 per piece against the Sh700 market price, it also bought KN95 masks at Sh700 per piece against the market price of Sh450 while disposable masks sold at the market price of Sh50 per piece were also procured at Sh90 each.

The allegations saw Kemsa Chief Executive Jonah Manjari sent packing.

Meanwhile, Director of Public Prosecutions Noordin Haji has said that he is still perusing the Kemsa file forwarded to his office by the EACC.

“Kemsa issue is not as straight forward as Kenyans think, procurement laws give a lot of discretion to the Chief Executive Officer,’ Haji told Citizen TV.

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