How Afya House wasted Sh21b in health lease plan

Afya House officials would have saved the taxpayer Sh21 billion had they purchased medical equipment for counties instead of leasing.

If the equipment had been purchased in 2015, two hospitals in each of the 47 counties could have been equipped with machines at Sh10.5 billion annually.

But the officials opted for the costly leasing, which saw the expenditure shoot up to Sh31.5 billion. Senators investigating the controversial deal are asking who benefited from the exorbitant venture. 

“An outright purchase would cost each county Sh181 million. A six-year 7.5 per cent value service contract would be Sh41.3 million, bring the overall total to equivalent of Sh233 million for a in seven years,” reads a cost-analysis report on Medical Equipment Services (MES).

Three years down the line, the country still has to pay a whooping Sh53 billion more for the controversial project that is under investigations by the Senate.

It is now emerging that officials at Afya House ignored Government advice to purchase the medical equipment.

The cost of the Sh38 billion Jubilee flagship project launched in 2015 for a seven-year lease period, with an option of a three-year extension, has now increased to Sh63 billion with the Ministry of Health justifying that the variation has been occasioned by dollar exchange rate and additional 21 hospitals.

But lawmakers have dismissed the argument as flimsy based on an analysis report on the MES that The Standard is privy to, which lay bare what went down at Afya House.

The report contains all the equipment sourced and costs, which came to Sh181 million for two hospitals, assuming all equipment supplied met the US/EU standards.

In the report, the Sh7 billion CT scan now procured by the ministry targeting 37 counties is not listed.

For instance, in the report, a fully equipped theatre goes for Sh10.3 million while the theatre instrument CSSD is Sh15.3 million.

Renal equipment goes for Sh25milion, Intensive Care Unit (ICU) Sh28 million while radiology goes for Sh 38.2 million.

The CT scan machine is alleged to be three times the market. In light of this, Sh585 million of the equitable share per county of Sh38 billion was lost to the Public Private Partnership partners.

The report illustrates that Sh585 million plus Sh223 million was equivalent to Sh808 million for lease period.

“This means that of the Sh38 billion, each county was going to pay Sh 808 million for seven years,” reads the report.

In turn, it means if the Government gave county conditional grants of staggering Sh223 million per year, they would be able to purchase the equipment for the lease period.

“Therefore, the total cost of the project should have cost Sh10.481 billion in one year. Why are we committing the country to staggering project cost of Sh31.5 billion whereas if we purchase, it would save the country Sh21.09 billion. Who is pocketing the money?” the report questions.

The report, according to senators, formed the basis for the Council of Governors (CoG) to reject the equipment before the latter was forced to sign the MoUs with the ministry.

The senators have raised concerns with overpriced machines and questioned the circumstances surrounding the mysterious review of cost by five international firms contracted in 2015 to supply the equipment to 47 counties and four referral hospitals.