US giant General Electric has slapped the Treasury with fines for non-payment of leasing fees linked to medical equipment installed in 98 county hospitals.
Documents released from Parliament indicate that GE Healthcare has fined Kenya Sh80 million for delayed payment of leasing and service fees of the equipment.
The Health ministry had sought MPs’ approval of Sh5.1 billion to settle the leasing fees, but the request was shot down with the law makers agreeing to release Sh1.7 billion.
In 2015 Kenya signed a Sh25 billion deal with GE to provide 585 pieces of diagnostic imaging equipment such as X-rays and ultrasound machines for 98 hospitals nationwide.
Under the deal, the Treasury was to offer a regular service fee to GE — a departure from previous medical deals that delivered a one-off upfront payment to the supplier following a procurement.
The service covers equipment lease, maintenance and training over seven years, but Kenya has delayed payment prompting fines.
“The ministry, despite a request by the parliamentary health committee, had not provided any evidence of a demand notice for the fines of Sh80 million accrued in interest from General Electric,” noted House documents guiding the review of the supplementary budget.
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From the documents it’s not clear how much GE is owed or whether other supplies of the medical equipment including Philips, Bellco SRL, Esteem and Mindray Biomedical Company have not been paid.
The five inked a deal worth Sh38 billion with GE taking a larger chunk of the contract. The firms were expected to earn slightly more than Sh5 billion annually in leasing fees.
A recent leaked Health ministry internal audit termed some of the payments under the deal as irregular. The auditor-general questioned Esteem’s supply of ultrasonic washers and 29 sets of surgical equipment while Belco was faulted for supply of dialysis machines.
GE declined to comment on this story while expressing support for the leasing deal.
“We are not in a position to comment on the matter, however, GE remains committed. We will continue collaborating with the government and the private sector for Kenya’s sustainable development,” responded GE to email questions.