Tender wars leave Health ministry with Sh40bn unpaid court awards

Tender wars have left the Health ministry with a bill of Sh40 billion resulting from court awards to firms which have remained unpaid in 21 years.

The amount, which arose from suits filed by two suppliers for breach of contracts is half the annual budget of Sh80 billion that the ministry received in the current financial year.

The National Assembly’s Public Accounts Committee (PAC) heard that the ministry is negotiating with two suppliers to reduce the pending bill that has grown over years following accrued interest in unpaid court awards.

The two suppliers, Equipment Agencies Limited and Faram East Africa Limited sued the ministry for breach of contract. Equipment Agencies is said to have supplied malaria control equipment, drugs and protective clothing for a principal amount of Sh1.1 billion on which the interest of 18 percent per annum was Sh7 million in 1999, bringing the total to Sh1.8 billion.

Faram East Africa Limited filed a suit alleging breach of contract while claiming Sh14 million being the amount outstanding in respect to supply of 50 low heat thermal treatment units for sterilising and shredding medical waste.

“We will be meeting the two suppliers, officials of the Attorney General and Ministry of Finance to negotiate on this huge bill. The Attorney General’s office is steering these discussions,” Susan Mochache, the Health principal secretary said.

She told the committee chaired by Ugunja MP Opiyo Wandayi that the ministry owes Sh41 billion in pending bills out of which 90 percent or Sh40.2 billion arose from court awards.

“We have historical pending bills that goes back to the year 1999. We owe two suppliers Sh40.2 billion who sued us and won court awards. The mministry was sued by the suppliers and we are concentrating on historical pending bills,” the PS said.