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what are the processes that drive government action and why do we repeatedly fail?

The government was unsurprisingly unprepared for the second wave of Covid 19 despite clear indicators and warnings from many quarters. Amidst a grim scenario also comes to light the fact that the senior population of the country that enthusiastically took the first shot of the Covishield vaccine may not get their booster dose as the government has failed to procure and secure the vaccine. A majority of the population is still waiting their turn.

So what are these processes that drive government action and why do we repeatedly fail? The procurement processes and mechanisms are definitely not something foreign to the bureaucrats taking into consideration that we should have SOPs for emergency situations in place.

Inefficiency and corruption risks have put public health at stake at a time when the focus should be strictly on riding this wave of the Covid 19 virus with minimal loss to life and health.
While we want affordable, safe and efficacious vaccines and possibly want as many free of cost, could government expenditure not be diverted to vaccine acquisition and upgradation of public health care systems and infrastructure. If we can envisage holding mid term elections that does not come cheap and comes from public money, what could be then stopping the government from committing to public welfare at large?

Again the procurement systems are highly questionable as they lack transparency and accountability at all levels. What could be some things that the government could do to mitigate corruption in vaccine procurement processes? Should the government open up the market to the private sector to compete and bring in different types of vaccines, medication and equipment into the country under certain regulatory parameters? Is it legitimate to expect businesses to function without margin in procuring vaccines? How is the government determining prices of the vaccines? How is it channelizing funds? Who is responsible for time frames? Who is to blame for the current scenario?

In this edition of Business 360, we asked a few individuals for their perspective on vaccine procurement strategy of the Government of Nepal.

Kishore Kumar Maharjan
Chairman, Star Hospital

The second wave of Covid 19 has hit us like Tsunami. Majority of the general public became totally careless since the government first gave false impression to the public that we, Nepalese, have strong immunity to keep the Covid virus at bay and hence simple domestic measures can easily take care of the virus. The government allowed the general public to carry on their activities as if the Covid 19 never existed. While around 50% of the people in Kathmandu Valley exercised caution, although social gatherings were never boycotted, near 100% of population elsewhere in the country totally ignored the basic rules of safety against Covid 19. People stopped wearing masks, ignored social distancing, and basic sanitation rules were forgotten.

The ongoing political wrangling since so long with the political leaders fighting for control of power has kept all other activities required for the development of a nation on the backfoot. The Government has done nothing for the growth of the economy, creating jobs, streamlining the education system, improving the health infrastructure, etc. The government totally ignored the onslaught of the second and then the third waves that hit many countries including North and South America, UK and Europe. Even when the new deadly variant of the virus surfaced in Southern India and then slowly started travelling north, the government still did not act. Neither did the government think that the border entry points need to be screened nor beef up the hospital infrastructure.

We had good 3 weeks warning that we must have more beds, more ventilators and more oxygen production. We silently watched the Indian casualty top 1,000 per day with daily positive cases crossing 100,000. Today, with India’s casualty exceeding 4,000 per day and daily positive cases topping 400,000 since more than a week, thousands of Nepalese migrant workers have fled back home bringing with them the deadly new Covid variant.

In its pursuit for power and position in the politics, the government failed to make correct decisions regarding vaccines for the people. We had choice of several vaccines – Astra Zeneca from India, Sputnik from Russia and Vero Cell from China. The Government, sitting on trillions of unspent development expenditure budget, did not want to spend a few billion rupees to buy vaccine to safe guard its population. Instead the government kept on spreading its arms for alms from foreign government for free vaccine.

There was enough time to import vaccine by engaging business community, but the government did not want the trading companies to even take 10% agency commission for brokering deals. The government set small profit margins for traders and service providers that would not make such imports feasible at all. The Government failed to calculate the trade off point and wanted to remain a popular government by presenting image of a tough government protecting the interest of the public. They desperately wanted to keep the price below Rs 1000 whereas price between Rs 1,500 and Rs 2,000 would have been feasible and win-win situation for all parties concerned.

The public pay Rs 2,000 for RT PCR test. Many take even two tests per month and this is not even a process of protection from Covid 19. Which Nepali would not readily pay Rs 2,000 for a shot of vaccine and another Rs 2,000 for second shot after 9-12 weeks for protection? This may give up to 90% plus protection and even if infected, would not be life threatening with very low cost of treatment.

Now, India has stopped export of the highly effective and preferred Astra Zeneca as they themselves have run short of supply. We still have opportunity for importing the Russian and Chinese vaccines. But then now it looks like too little too late. No trader seems to be interested and the government’s red tape process is not going to make anything easy.

Today, on per capita basis, our daily mortality and positive cases have topped even India. Our small nation with such poor health infrastructure cannot handle the situation at all. With more than 100,000 active positive cases (a month ago, it was below 4,000) less than 10,000 hospital beds, only around 1,100 ICU beds and less than 500 ventilators, the hospitals are already bursting to their seams. With more than 80% of the patients requiring oxygen, 50% of them requiring more than 10 liters per minute and 20% plus requiring 30 to 70 liters per minute, the oxygen supply system cannot handle the demand anymore. Numerous big and small hospitals including medical colleges have closed their doors to fresh inflow of patients (many deaths have been reported due to lack of oxygen), the people of Nepal can now only sit and pray. Hence let us all keep on exercising caution following the principle of wearing mask, social distancing and sanitizing ourselves.

Purushottam Ojha
Former Secretary, Government of Nepal

Public procurement remains the most perplexing issue most of the times in Nepal; be it in the procurement of goods, services or public works. We have been constantly reading the news of wrong procurement that includes collusion among parties, compromise in quality and standards, deliberate avoidance of competition, price escalation and doling out other undue advantages to the suppliers or contractors. These type of actions has become the means of extracting money and other illegal benefits by the public officials in connivance with the contractors or the other parties.
We have observed that series of news has appeared in the local media about the misuse of the procurement process such as procurement of wide body aircraft for Nepal Airlines, land procurement by Nepal Oil Corporation for construction of oil storage facilities, security printing, procurement of medical equipment and pharma products for containment of corona virus etc. and very recently in procurement of vaccines from Serum Institute of India. These are major procurement activities being taken by the government bodies in recent years. But, there are numerous procurement tasks being carried out regularly by the government ministries and departments as part of their annual work plan.

Public Procurement Act and the Regulation provides detailed rules and procedures while carrying out procurement by the government and other public institutions or enterprises. Whatever is the case of procurement, it all rests on the competency, honesty and sensibility of the officer in-charge to make a sound judgment and procurement decision for public offices.

It is the right of media and common people to inquire or get information about the public procurement as the payment in such cases is made from taxpayer’s pockets. The process is supposed to be fair, transparent and economical. So, the official responsible for procurement should always look for transparency in transaction, ensure proper standards and quality of goods and services delivered and take frugal approach and become answerable to the people for any questions raised therein. The inner motive of the public officials, including the political bosses, is important in the procurement process as they should be honest and impartial and not play around the loopholes of the regulations. They should carry their tasks with honesty and dignity.

Public procurement during the period of crisis is more sensitive as it is a race against time and builds pressure on costs. The challenge in such situation lies in getting the procurement process done in a very transparent manner without hiding anything from the general public. Some quarters of the people, particularly traders may go for making hay while the sun shines, seizing the opportunity to make personal gain in time of crisis. This should be discouraged from all quarters. Such a situation becomes excruciatingly difficult for public officials if there is political backing for misappropriation of public fund under the cover of emergency procurement.

Procurement of vaccines from Serum Institute of India (SII) is a case in point. Nepalese people are desperately waiting to be vaccinated in the midst of raging corona virus in the country. There is no point in bringing the broker in picture for procurement of vaccines from a renowned and leading company in vaccine manufacturing. Government of Nepal should take measures of direct purchase from the manufacturing units in India. For the sake of transparency, government could form a high level inter-ministerial committee to negotiate price and other details for ensuring smooth supply of vaccines from the manufacturing company. Such a committee could enquire about ex-factory prices of each ampoule of vaccine, transportation cost, incidence of taxes and duties, storage and other logistics and come up with solutions to deliver vaccines as early as possible.

The normal procedure does not work in a situation of emergency and needs to be done in a firefighting mode. This process should be facilitated by the intervention at the highest level of government if needed. Bringing brokers or agent in the process and start bickering with these people is just waste of time. Government should come up with urgent actions, deal with the supplier directly and straightway deny any omission or commission in favor of broker or middlemen.

Upendra Poudyal
Regional Representative – Asia Pacific, Global Alliance for Banking on Values

The second wave of Covid 19 has hit us like Tsunami. Majority of the general public became totally careless since the government first gave false impression to the public that we, Nepalese, have strong immunity to keep the Covid virus at bay and hence simple domestic measures can easily take care of the virus. The government allowed the general public to carry on their activities as if the Covid 19 never existed. While around 50% of the people in Kathmandu Valley exercised caution, although social gatherings were never boycotted, near 100% of population elsewhere in the country totally ignored the basic rules of safety against Covid 19. People stopped wearing masks, ignored social distancing, and basic sanitation rules were forgotten.

The ongoing political wrangling since so long with the political leaders fighting for control of power has kept all other activities required for the development of a nation on the backfoot. The Government has done nothing for the growth of the economy, creating jobs, streamlining the education system, improving the health infrastructure, etc. The government totally ignored the onslaught of the second and then the third waves that hit many countries including North and South America, UK and Europe. Even when the new deadly variant of the virus surfaced in Southern India and then slowly started travelling north, the government still did not act. Neither did the government think that the border entry points need to be screened nor beef up the hospital infrastructure.

We had good 3 weeks warning that we must have more beds, more ventilators and more oxygen production. We silently watched the Indian casualty top 1,000 per day with daily positive cases crossing 100,000. Today, with India’s casualty exceeding 4,000 per day and daily positive cases topping 400,000 since more than a week, thousands of Nepalese migrant workers have fled back home bringing with them the deadly new Covid variant.

In its pursuit for power and position in the politics, the government failed to make correct decisions regarding vaccines for the people. We had choice of several vaccines – Astra Zeneca from India, Sputnik from Russia and Vero Cell from China. The Government, sitting on trillions of unspent development expenditure budget, did not want to spend a few billion rupees to buy vaccine to safe guard its population. Instead the government kept on spreading its arms for alms from foreign government for free vaccine.

There was enough time to import vaccine by engaging business community, but the government did not want the trading companies to even take 10% agency commission for brokering deals. The government set small profit margins for traders and service providers that would not make such imports feasible at all. The Government failed to calculate the trade off point and wanted to remain a popular government by presenting image of a tough government protecting the interest of the public. They desperately wanted to keep the price below Rs 1000 whereas price between Rs 1,500 and Rs 2,000 would have been feasible and win-win situation for all parties concerned.

The public pay Rs 2,000 for RT PCR test. Many take even two tests per month and this is not even a process of protection from Covid 19. Which Nepali would not readily pay Rs 2,000 for a shot of vaccine and another Rs 2,000 for second shot after 9-12 weeks for protection? This may give up to 90% plus protection and even if infected, would not be life threatening with very low cost of treatment.

Now, India has stopped export of the highly effective and preferred Astra Zeneca as they themselves have run short of supply. We still have opportunity for importing the Russian and Chinese vaccines. But then now it looks like too little too late. No trader seems to be interested and the government’s red tape process is not going to make anything easy.

Today, on per capita basis, our daily mortality and positive cases have topped even India. Our small nation with such poor health infrastructure cannot handle the situation at all. With more than 100,000 active positive cases (a month ago, it was below 4,000) less than 10,000 hospital beds, only around 1,100 ICU beds and less than 500 ventilators, the hospitals are already bursting to their seams. With more than 80% of the patients requiring oxygen, 50% of them requiring more than 10 liters per minute and 20% plus requiring 30 to 70 liters per minute, the oxygen supply system cannot handle the demand anymore. Numerous big and small hospitals including medical colleges have closed their doors to fresh inflow of patients (many deaths have been reported due to lack of oxygen), the people of Nepal can now only sit and pray. Hence let us all keep on exercising caution following the principle of wearing mask, social distancing and sanitizing ourselves.

Anal Raj Bhattarai
Chartered Accountant

What could be some things that the government could do to mitigate corruption in vaccine procurement processes?

In country like Nepal with poor quality health data and where a large number of citizens lack formal identity documents, it will be much easier for corruption to go undetected. The urgency of vaccine, therapeutics and diagnostics for Covid 19 has resulted in a substantial rise in public interest. The rapid vaccinating requirement and the urgent demand for a vaccine may create opportunities for corruption that are likely to impede public health efforts. Conflicts of interest related to supply of a Covid 19 vaccine is susceptible to a corruption risk. There can be a lack of transparency, and thus a potential risk of corruption. Government must create special commissions to negotiate the purchase of Covid 19 vaccines and ensure transparency for all types of procurements. The creation of a specialised committee with a strong anticorruption mandate to oversee the prioritization, distribution and monitoring of vaccine programmes, as well as related public policy, can act as a critical oversight body during a public health emergency.

Should the government open up the market to the private sector to compete and bring in different types of vaccines, medication and equipment into the country under certain regulatory parameters?

The successful implementation of Covid 19 vaccination programmes through private sector involvement should support robust supply systems ensuring effective vaccine storage, handling and stock management; rigorous temperature controls in the supply chain; and the maintenance of adequate logistics management information systems and ensure transparency when establishing the criteria used to determine priority vaccine recipients and also make sure that this is then communicated widely to the population. If such criteria can be fulfilled, private sector may be allowed to do so.

Is it legitimate to expect businesses to function without margin in procuring vaccines? How is the government determining prices of the vaccines?

No, private sector cannot operate without margin. However, transparency and accountability is vital for handling public emergency. These transactions require comprehensive auditing, oversight and reporting mechanisms to ensure accountability and effectively mitigating corruption risks.  Private sector, and other relevant stakeholders, may seek to influence government decision-making concerning vaccine policy and supply management. This is particularly worrying given the widespread trend of governments easing due diligence processes therefore, oversight mechanisms to procure and distribute vaccine is urgently needed.

Pricing and distribution must be monitored to reduce unfair business practices.

How is it channelizing funds?

The process has not been made available to the public. Given the scale and complexity of procuring and distributing Covid 19 vaccines, number of short-term measures should be implemented. Those measures should include reporting mechanisms which can support transparency and strengthen monitoring. Other strategies involve embedding anti-corruption into emergency responses and enabling environments conducive to accountability.

Who is responsible for time frames?

Before analyzing these issues, the nature of the challenge at hand and the fact that demand for vaccines far outstrips supply and the type of vaccine in question need to be taken consideration. Different vaccine cold chains will require different storage and transportation needs, which could affect the time frame.

Who is to blame for the current scenario?

Lack of, unclear or inconsistent basic legal framework and unclear competences of the authorities responsible for vaccine rollout and inefficient law enforcement and prosecution inefficient or incompetent oversight institutions or supervisory authorities non-transparent public finance processes are to be blamed. Therefore, there is no single body that is to be blamed.

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