The Ministry of Health has extended the controversial medical leasing contract for the provision of medical kits to counties by another three years, in a major relief to a consortium of American and Italian firms behind the lucrative deal.
Health Chief Administrative Secretary Rashid Aman said counties agreed to a three-year extension once the current contract lapses in December so that they can continue to provide the required services. This means after the next general election the new county bosses will have to be tied down to the deal with some continuing to pay without using them.
This comes weeks after the Parliamentary Committee on Finance and Budget gave the ministry one month from February 15 to advise if counties should purchase the medical kits or abandon the project when it lapses in December.
“The counties have agreed to a three-year extension when the contract lapses in December. There were several choices that the contract provided and one of them was an extension and that is what they opted for,” said Mr Aman in an interview with Business Daily on Tuesday.
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“There was also the option to terminate the contract but that cannot help anybody because the counties will be left with nothing.”
The national government contracted five firms to lease specialised kits such as theatre equipment, renal kits, ICU equipment and radiology equipment to the counties for treating diseases like cancer and diabetes.
The five international companies that won the leasing tender are General Electric (GE), from the USA, Philips from the Netherlands, Bellco SGL from Italy, Esteem from India and Mindray Biomedical of china.
They were to earn a leasing fee of more than Sh5 billion annually over seven years.
The leasing deal-amounting to Sh38 billion- was to save the state huge upfront costs in purchase and maintenance fees for medical equipment.
The order comes amid counter-accusations between the ministry and counties over a lack of consultations before the project launch.
But the deal has been shrouded in controversy as medical kits worth millions of shillings remain idle across health facilities in the 47 counties due to a lack of specialised staff to operate them, lack of power and rooms to set them up.
“We recognised that very early but those are isolated cases here and there. In specific cases, where there was no three-phase power for the equipment or quality water required for renal dialysis and we have been addressing those issues with the counties,” he said.
The national government reckons that leasing medical equipment, as opposed to buying, would help cut costs and increase efficiency because the lessors would bear the cost of routine maintenance.
Counties will receive Sh5.2 billion for leasing of medical equipment in the financial year starting July 1 after the Senate passed the County Government’s Additional Allocation of Revenue Bill.
The Bill allocates each of the 47 devolved units Sh110.64 million for the leasing of the controversial multi-billion medical deal for the provision of specialised medical kits.
The Treasury allocated Sh4.5 billion every year or Sh95.7 million per county in 2015/16, 2016/17 and 2017/18 financial years.
The amount was increased to Sh9.4 billion or Sh200 million per county in the 2018/19 period but reduced to Sh6.2 billion or Sh131.9 million per county in the year ended June 2020.
The Bill makes provision for the transfer of conditional allocations from the national government’s share of revenue and from development partners to the county governments.
A Senate committee investigation accused the Ministry of Health of overseeing the conversion of the contract from the initial public-private partnership (PPP) to a public procurement process for the Managed Equipment Services (MES) project, which Senators branded a “criminal enterprise.”
The committee noted had PPP been pursued, the total project cost would have been Sh43 billion over 10 years, but the country is paying more than Sh63 billion — the exact cost can’t be ascertained yet — over seven years.
The committee said other actions gave the impression that the project, though noble for its objective to improve healthcare provision in the counties, was a gravy train for officials and businessmen.
They raised questions on why the Ministry of Health bosses unilaterally abandoned an option for each county to pay Sh31 million annually for medical equipment and chose a procurement method that increased the annual cost to Sh200 million.