The taxpayer may have lost close to Sh7 billion in the procurement of 37 CT scanners at an inflated cost of Sh227 million per unit under the Managed Equipment Service (MES), which was a deal between the Kenyan and Chinese governments.
Ordinarily, a unit costs between Sh40-45 million at the current market prices, but the Ministry of Health procured each at a whooping Sh227 million in a deal described by MPs as a major rip-off.
What is intriguing also is the fact that even though health is a devolved function, making the county governments the end users of the equipment, the Council of Governors, were not involved in the procurement. This raises questions on who made the decision to procure the equipment.
NEUSOFT MEDICAL SYSTEMS
The details of the scandal emerged when Health Principal Secretary Peter Tum appeared before the Public Accounts Committee on Monday to explain the 2015/16 expenditure and revenue accounts of the ministry.
The PS said even though the deal for the purchase of the CT scanners was a government to government one, the ministry abandoned it and opted to award the tender to Neusoft Medical Systems Co ltd, a Chinese firm. In the deal, the Kenyan government contributed Sh1.7 billion under the agreement of economic and technical cooperation signed between the China Development Bank and the National Treasury, which translates to 20 per cent of the total cost.
The Chinese government was to advance Sh7 billion. Neusoft was to supply, install, and maintain computer tomography in hospitals identified by the ministry for five years.
However, members of the committee chaired by Ugunja MP Opiyo Wandayi raised questions on the procurement. They said the scanners should not have been procured as they fall under the same category of the medical equipment the government acquired at a cost of Sh42 billion and leased to counties in 2015.
They put the cost of a scanner at about Sh40 million, suggesting the machines had been overpriced four times to benefit senior government officials in the ministries of Health and National Treasury.
“Why are CT scanners treated differently from the MES? If not, why did the ministry fail to lease them the way it has leased others,” Mr Wandayi asked.
He insisted that there is no sufficient reason the scanners were not included in the MES. “Were there any reasons why they were not included? I am asking this because the ministry has gone ahead to procure CT scanners separately. Someone can conclude that the reason it was not included in MES was to create room for future rip-off of public funds,” said Mr Wandayi.
Tongaren MP Eseli Simiyu demanded to know why the ministry paid for the MES and scans yet they were not budgeted for, which he said violated the requirement of the Public Finance Management Act.
While he agreed that the scanners fall in the same category as imaging equipment covered in the MES, Mr Tum said the ministry had planned to procure the scanners under a totally different framework.
“I cannot say with certainty that CT scanners were not part of the MES deal. Funding may not have been there,” Mr Tum said.
DEFENDED UNIT COST
The PS defended the unit cost, saying it included construction of new buildings, air conditioners, special thermal film printer, report printer, warranty and spare parts for five years among other components.
He said it further included installation of the equipment at Moi Teaching and Referral Hospital, Kenyatta National Hospital and 34 facilities in 34 counties selected to benefit from the medical equipment.
Tum said the installation of the equipment was currently ongoing at the two referral hospitals and 34 other county referral hospitals.