Government cancels US$60m NatPharm Covid-19 deal

ACTING Health and Child Care permanent secretary Gibson Mhlanga has acceded to government demands to cancel the US$60 million deal that would have seen a Switzerland-registered company, Drax Consult (Drax) supply Covid-19 equipment, the Daily News reports.

A fortnight ago, Finance ministry permanent secretary George Guvamatanga instructed Mhlanga to cancel the deal citing price distortions.
Mhlanga on June 5 wrote to National Pharmaceuticals (NatPharm) managing director Flora Sifeku directing her to pull the plug on the deal.

The government had declined to pay for the goods which included test kits and personal protective equipment (PPE) — which were already in the country — on account that the prices were inflated.

“You are directed to cancel all contracts that you had with Drax SAGL with immediate effect. Please be advised that this process needs to be completed by latest June 12, 2020 and all documentation showing cancellation of the same to be submitted in my office by then. Please treat this issue with the urgency that it requires,” Mhlanga wrote.
Efforts to get a comment from Health minister Obadiah Moyo could not yield results yesterday.
Drax, which had been supplying drugs to NatPharm since last September, was awarded two separate contracts valued for a combined US$60 million.
In a damning letter to Mhlanga on May 28, Guvamatanga said Treasury would not pay for the supplied goods until Drax reviewed the prices downwards.
“As you are aware, a meeting was held between the ministers of Finance … and Health and Child Care in which a representative of Drax Consult was invited to participate to discuss the contract on the supply of Covid-19 requirements, as well as the suspension of the US$20 million contract and the cancellation of the US$40 million contract with the same company.
“One of the outcomes of the meeting was that government did not accept the prices that had been quoted on items under the above-mentioned contracts and Drax Consult was advised to engage NatPharm to review the prices downwards.

“The understanding was that payment would only be made upon submission of revised prices, as well as upon confirmation of delivery of the outstanding Covid-19 equipment which the supplier had advised was still in transit,” Guvamatanga wrote.

Drax was accused of inflating prices of PPEs and some medical consumables it had already brought into the country which were reportedly valued at nearly US$1 million.
Guvamatanga said he authorised the release of the consignment of the Covid-19 equipment, which was being held at Robert Gabriel Mugabe International Airport, on May 8 based on the urgent need for test kits in the country.
However, the government would not be paying for them until the Health ministry and Drax agree on reasonable prices.
Meanwhile, the country’s confirmed coronavirus cases have shot up to 314, as 27 new cases were recorded from returnees who came from South Africa, according to figures released by the Health ministry last night.

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