Maravi

Donors question govt’s $53m deal

Donors question govt’s $53m deal
Written by Staff Reporters
Monday, April 27, 2009 3:12:40 PM

SOME donors supporting the Ministry of Health in various ways have questioned the Zambian government’s intention to come up with a mobile hospital for each of the nine provinces in the country to a tune of US $53 million (about K301 billion).

According to sources within the donor community, the Zambian government is in the process of acquiring a US $53 million loan from EX-IM Bank of China to facilitate the acquisition of the mobile hospitals from a Chinese firm called China National Aero-Technology Import and Export Corporation (CATIC).

The sources disclosed that donors held meetings last week in Lusaka to discuss this pending transaction between the Ministry of Health, on behalf of the Zambian government, and CATIC concerning the mobile hospitals.

According to sources, the donors have since written to the Ministry of Health questioning and seeking clarification on the matter.

“As you know, there are several donors in the Ministry of Health and going by the two meetings we have held so far, there is likelihood that some donors might withhold their support to the ministry. This support I am talking about comes in various ways including financial, technical and material,” the source said. “We are concerned because we are stakeholders in the ministry and yet we are just hearing rumours about this. This is a huge contract and yet it is going by single sourcing. One unit is going to cost at least US $4.2 million. The government has to spend US $15.5 million for other services, bringing the total to US $53 million. We have views to express about this matter and a number of questions to ask. We are not sure if this is what Zambia needs at the moment looking at the various needs in the Ministry of Health.”

And a visitation to the CATIC official website revealed that the company is a large-scale state-owned conglomerate with aviation products and technology as its core business.

And according to a proposal letter signed by CATIC project marketing and development division managing director Zhang Yan to Ministry of Health permanent secretary, nine mobile hospitals would be required to cater for all the nine provinces in Zambia.

“Subject: proposal for mobile hospital. On behalf of China National Aero-Technology Import & Export Corporation (hereinafter referred to as CATIC), I would like to present my highest compliments to you. I am honoured to propose to you the concept of Mobile Hospitals (hereinafter referred to as MH),” Zhang stated. “It is Zambia government’s vision that all Zambian citizens should access quality health care especially in the rural area of the country. MH is a concept and solution which could help Zambian government to achieve this goal. First of all, the movable MH can deliver medical service to residents nearby their home in rural and remote area where medical service is inaccessible. Secondly, the MH can deal with any epidemic disease such as cholera in any circumstance effectively and efficiently.”

Zhang stated that, moreover, the MH was also a quick reaction to all large-scale of injuries due to natural disaster.

“In order to cover the whole country, we propose that nine sets of MH be established, namely, one in each province. The MH could visit every district of that province and stay there for certain period of time before it moves to another district for delivering medical service. The MH will move year around for that province except for the staff domestic leave and mechanical check for vehicle and medical equipment,” she stated. “The greatest advantage of this type of MH is that it can provide medical service to as many people it can in remote area.”

Zhang stated that CATIC thinks that the concessional loan from EX-IM bank of China was still a good financing method that the Ministry of Health could consider applying for, for the funding of this project.

And according to CATIC’s commercial proposal for mobile hospital dated January 6, 2009 and signed by Zhang, the final payment terms shall be approved by the Chinese government and the EX-IM bank of China.

CATIC stated that the main target of the proposed mobile hospital, instead of traditional hospital in the concrete building, was to provide a concept and the solution of movable medical services built on the chassis and specifically designed for countryside where there was lack of medical institution and for unforeseen regions that exposes to diseases, epidemics and disasters.

“The advantages of these kinds of the above are high mobility, quick response to events and high efficiency of first-aid, which would be helpful to provide the medical service highly demanded by rural and remote people,” the document stated. “The entire set of MH includes six departments, namely, spot emergency department, ambulatory treatment department, surgical cure department, spot care department, assorted injury inspection department and medical support department, totally nine vehicles per set.”

CATIC stated that its medical staff would work together with the Zambian medical staff for the successful running of MH for two years.

According to the quotation table, equipment for nine sets of mobile hospitals would cost US $36, 260, 355.92, contingency spare parts for two years $3, 300, 000.00, medicine and consumable medical appliance US $6, 000, 000.00. The quotation table further indicates that for 12 engineers for local maintenance for two years, 27 Chinese medical staff two years and training for Zambian engineers and medical staff would cost US $5, 144, 650.00 and the total for all the quoted items would be US $50, 705, 005.92.

“The quotations are all based on exchange rate of USD=6.8RMB,” it stated. “Payment: 30 per cent of total value as down payment should be paid within one month after signing the contract; 40 per cent of the total value should be paid upon delivery at Port of China as delivery ready payment within one month after all the equipment is ready for delivery at Chinese port; 30 percent of total value should be paid within one month after the delivery of all equipment in Lusaka,” the document stated. “We understand that Zambian government will apply Chinese government’s concessional loan to fund this project. Therefore, the final payment terms shall be approved by Chinese government and the Ex-IM Bank of China.”

On inspection and shipment, CATIC stated that five persons from Zambia would be invited to carry out the inspection before shipment of main equipment of mobile hospital in China.

It stated that mobile hospitals would be delivered within eight months after effectiveness of the contract.

“Partial shipment will be allowed. Spare parts, medicine and medical appliances will be delivered in partial shipment during guarantee and service period. Guarantee: the guarantee period will be as follows; chassis, one year after delivery or 25, 000 kilometers (whichever comes first). Others: one-year guarantee after delivery. Country of origin: P.R. China,” CATIC stated. “Spare parts and after-sale services: spare parts for two years will be provided. The buyer [Ministry of Health] would provide a warehouse for the spare parts; medicine and medical appliance in Lusaka in compliance to the requirement of CATIC, while CATIC will help to establish a warehouse management system. Twelve mechanical engineers will be sent to the buyer’s country [Zambia] for two years, one of which will stay with each mobile hospital for the purpose of maintenance of chassis and cabins as well as training of relevant staff. Three of them will work in Lusaka service centre for management and technical support.”

It stated that training programmes on operation and maintenance of vehicles and main medical equipment/facilities would be provided to the local trainees in Lusaka for four weeks by CATIC’s technical team and the Ministry of Health shall provide support for classroom and selecting of trainees.

CATIC stated that periodical basic medical training would also be provided by the Chinese medical staff during their services in Zambia.

CATIC stated that there was provision for supplying medicine and medical appliance during service period already offered in the quotation and that a detailed list would be provided later.

“CATIC will send a medical service team for each mobile hospital for two years in Zambia including two experienced doctors and one nurse. Apart from supplying medical service, CATIC’s medical services team will also conduct training at site to local doctors in general medical treatment and operation of medical facilities of MH,” CATIC stated. And according to a contract between the Ministry of Health and CATIC , the total amount of this contract is US $52, 995, 008 (about K301 billion at yesterday’s exchange rate).

“Subject of contract: The subject of this contract is to supply to the buyer [Ministry of Health] the following commodities and services; - nine sets of mobile hospital, medicines and medical appliance, spare parts, training, medical support by medical service team (MST) in Zambia and technical services in Zambia,” the contract stated. “Each mobile hospital consists of the following: 12 vehicles; one medical ambulance, one monitoring and treatment vehicle, one surgery vehicle, one out patient vehicle, one medicine and medical appliance supply vehicle, one X-ray vehicle, one laboratory vehicle, one living vehicle, one power supply vehicle, one water supply vehicle, one multipurpose truck and one vehicle for staff.”

It stated that based on its functions, necessary medical equipment and instruments should be installed inside each vehicle.

“Medicine and medical appliance: the seller [CACTIC] shall be responsible for supply of medicines and medical appliance for the buyer [Ministry of Health]. All kinds of medicines and medical appliance, which are produced under the Chinese standards, are entirely recognized and accepted by the buyer. The buyer should be responsible for storage of all the medicines and medical appliance. Dispensing should be according to the working schedule. Without mutual signed agreement, these medicines and medical appliance can only be used for the mobile hospitals and cannot be used for other purposes,” the contract stated.

The contract further stated that CATIC will be responsible for supplying spare parts for vehicles, cabins, medical equipment and instruments.

“The total amount of this contract is CIP Lusaka US $52, 995, 008.00,” the contract stated.

The summary of the contract price indicated that one mobile hospital would cost US$ 4, 172, 262 and the total for nine sets would be US $37, 550, 358. Spare parts, one lot, would cost US $4.3 million while medicines and material appliances, one lot, would cost US $6 million. It indicated that the price for 36 medical service teams experts for services in Zambia for two years, 12 technicians for service in Zambia for two years and 10 trainees from Ministry of Health for training in China for seven days would be US $5, 144, 650. Therefore, the total contract price is US $52, 995, 008.

“All the above prices are firm and fixed until the completion of this contract on condition that the contract can come into effect before the end of the year 2009,” the contract stated. “If any further alteration to the commodities [mobile hospitals, medicines and medical appliance and spare parts] in annex1 or additions required by the buyer [Ministry of Health] after the signing of this contract, by supplement agreement of parties, the seller [CATIC] will, wherever appropriate, carry out such alterations and additions, whereof the additional cost incurred by such alterations shall be borne by the buyer.”

The contract stated that in such an event, CATIC shall be excused from any delays in implementing this contract caused by such alterations and additions.

“The buyer shall make down payment of US $15, 898, 502.4, equivalent to 30 per cent of the total value of this contract, within 30 days from the date of effectiveness of this contract against the seller’s commercial invoice. After the confirmation of the receipt of the above down payment, the seller will start the manufacturing of commodities accordingly,” the contract stated.

It further stated that the Ministry of Health should make the delivery ready payment of US $21, 198, 003.2, which is equivalent to 40 per cent of the total value of the contract against CATIC’s shipping notice and commercial invoice when the commodities are ready for delivery at the port of China.

The contract further stated that the Ministry of Health should make the delivery payment of US $15, 898, 502.4, which is equivalent to 30 per cent of the total value of the contract within 30 days against the hand-over certificate and CATIC’s commercial invoice.

It stated that before delivery of the first batch of mobile hospitals, the Ministry of Health shall send a team consisting of four persons to China for a seven-day inspection and the ministry shall be responsible for the expenses of international round tickets.

The contract further stated that before the delivery of the first batch of the mobile hospitals, 10 trainees shall be sent by the Ministry of Health to CATIC’s factory for a seven-day training and the course would be focused on how to operate the vehicle, cabin, medical equipment and instruments.

“The seller shall be responsible for providing the classrooms and organising the training course. The expenses of accommodation, local transportation for the trainees shall be borne by the seller. The international round tickets shall be borne by the buyer,” the contract stated. “During the two-year service period of the MH, periodical trainings will be carried out for MH Zambian staff by the MST and service technicians of the seller.”

It stated that CATIC should carefully and strictly examine all commodities before delivery to ensure that commodities supplied under this contract meet the present technical specifications and are free from any defects in material and workmanship.

It stated that the total of nine sets of mobile hospitals would be delivered in two batches.

“The first batch of two sets of MH shall be delivered at Chinese main port within seven months from the latest date of the receipt of the down payment stipulated in 4.2. The second batch of seven sets of MH will be delivered within nine months from the receipt of the down payment. Spare parts, medicines and medical appliance will be delivered by the seller batch by batch according to the working schedule,” the contract stated. “All commodities under this contract shall be packed in a proper way suitable for long distance sea transportation, well protected against dampness, moisture and rough handling. The seller shall, 15 days before shipment, give a shipping notice to the buyer by fax or e-mail of the contract number, name of commodity, quantity, date of shipment and estimated time of arrival in Lusaka, Zambia in order for the buyer to make necessary arrangement for accepting the commodities.”

The contract further stated that CATIC will be responsible for dispatching a medical service team (MST) to Zambia to provide medical services for two years and the MST would consist of 36 experts including doctors and medical technicians.

“MST doctors will be working with Zambian medical teams with the MH according to the working schedule. Technicians will be responsible for operating the medical equipment and instruments and for maintaining the vehicles, cabins and the medical equipment and instruments,” it stated. “The number of MST should be divided into different medical groups (MG) according to the working schedule. Each MG will work in one MH for a certain period as specified in the working schedule. The buyer should apply work permits and be responsible for providing lodging for MST.”

The contract stated that CATIC will be responsible for dispatching 12 technical service technicians to assist the Ministry of Health for proper operation and maintenance of the supplied commodities in Zambia for two years and the ministry shall also assign a number of their technicians to work with CATIC’s technicians.

“The parties undertake that the Auditor-General of the Republic of Zambia or his agent or nominee shall have access to, and examine all the books, records, papers, reports and other documents relating to this Agreement,” the contract stated. “All disputes in connection with this contract or the execution thereof shall be amicably settled through friendly negotiation between two parties. In case no settlement can be reached, the case under dispute shall be submitted to arbitration for settlement. The arbitration shall be conducted by an arbitrator mutually agreed by both parties. The arbitrator shall apply the UNCITRAL rule of arbitration. The arbitral award shall be final and binding upon both parties. In the course of arbitration, the contract shall be continuously executed except the part of the contract which is under arbitration.”

On warranty, the contract stated that CATIC guarantee that all commodities supplied under the contract meet the present technical specifications and free from any defects in material and workmanship and the warranty period should be 12 months calculated from the date of the signing of the hand-over certificate.

The contract stated that within the warranty period, CATIC will be responsible for replacing or repairing any defective items due to defects as to material or workmanship and CATIC shall be responsible for the costs and freight of such replacing and repairing.

However, the contract stated that commodities and/or parts damaged by the Ministry of Health due to incorrect operation or maintenance shall be at the ministry’s expense.

“The seller will provide the buyer with two sets of documentation and operation/service manual for each MH at the same time of delivering the commodities. The seller promises to supply the buyer spare parts, besides those in annex 2 under this contract, upon separate orders from the buyer for a period of 10 years from the date of signing this contract. The terms and conditions of such supplying of spare parts shall be negotiated separately. After two-year service period, if required by the buyer, the seller can provide medical support upon separate agreement,” the contract stated. “Any claims in case of discrepancy in quantity should be filed by the buyer within 30 days after the arrival of the commodities in Lusaka, Zambia. Any claims in case of discrepancy in quality should be filed by the buyer within 90 days after the arrival of commodities in Lusaka, Zambia. Charges for dealing with claims should be borne by the responsible side.”

The contract stated that all taxes, duties, bank charges and fees of whatever nature levied, in connection with this contract inside the territory of China shall be borne by CATIC.

It stated that all taxes, duties, bank charges and fees of whatever nature levied, in connection with this contract outside the territory of China and related formalities for the commodities’ entrance into Zambia shall be borne by the Ministry of Health.

“For the sake of efficient operation of the commodities, the buyer [Ministry of Health] is responsible to apply for the duty exemption for all commodities under this contract from the relevant authorities of Zambia government. The MST will be allowed to import up to four vehicles into Zambia free taxes and duties. The buyer shall be responsible for the related formalities for the entrance of these vehicles into Zambia,” the contract revealed. “The MST will be allowed to bring necessary tools and office equipment and personal items for their work and stay in Zambia which shall be exempted from any duty and tax. The buyer should be responsible for the related formalities for the entrance of these items into Zambia.”

The contract stated that should either party be prevented from executing the contract by the cases for force majeure such as war, serious fire, floods, typhoon and earthquakes or other events recognised by both parties upon agreement as being cases of force majeure, the time for the execution of the contract shall be extended for a period equivalent to the effect of the occurrences.

It stated that the prevented party shall inform the other party as soon as possible by fax the occurrence of the force majeure and within 14 days thereafter, send by registered airmail a letter and certificate issued by the competent authorities concerned to the other party for its confirmation.

“When the case of force majeure is diminished or terminated, the prevented party must inform the other party by fax immediately and confirm it by a registered airmail letter. Each party shall bear its own costs incurred by the occurrence of the force majeure,” the contract stated. “Each party understands to maintain the commercial confidentiality of any information, data or document which it gains during the performance of this contract and not to make such information, data or document available to any third party.”

It stated that the contract shall not be altered, amended or assigned except by an agreement in writing, signing by both parties and performed concurrently with this contract.

“This contract is signed by the two parties and will come into force upon the signing of the related loan agreement for this contract between the Chinese side and the Ministry of Finance and National Planning of the Republic of Zambia,” the contract stated. “This contract shall terminate upon both parties having completed their obligations herein stated.”

CATIC was established in 1979 and is owned by Aviation Industry Corporation of China.

“It is a large scale state-owned conglomerate with aviation products & technology import and export as its core business. As a state authorised dealer of aviation products, CATIC has exported fighters, trainers, bombers, helicopters, transporters, general aviation aircraft and associated airborne equipment and ground support equipment as well as various components and spare parts,” CATIC introduction reads in part. “At present, over a thousand Chinese-made aircraft are flying over the sky in more than 30 countries.”

CATIC stated that its main products include ships, civil engineering machinery, food processing machines, medical equipment, container inspection systems, automobiles, motorcycles, bicycles and spare services.

Labels: DONORS, MINISTRY OF HEALTH

posted by MrK @ 2:14 PM