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Tuesday February 7th, 2023

Did pushing aside Serum Institute’s local agent cause a vaccination delay in Sri Lanka?

ECONOMYNEXT – Replacing Sri Lanka’s local agent of the Serum Institute of India (SII) with the State Pharmaceutical Corporation (SPC) in procuring the AstraZeneca Covishield vaccine would’ve led to a costly four-week delay in ordering the jab, a lawyer said.

This delay, in turn, could’ve contributed to the current shortage of some 600,000 second doses of the vaccine, the law firm LexAG told EconomyNext. Despite procurement guidelines allowing for circumventing standard procedure in a public health emergency, and the local agent as early as February 03 expressing no objection to the SPC’s directly importing the vaccine, the law firm said, there was an inexplicable delay in placing the order.

LexAG Senior Partner Attorney-at-Law Ranil Angunawela said in an email interview June 20 that the procurement guidelines spelt out in a 9 April 2020 circular issued by the Ministry of Finance authorises the cabinet of ministers to deviate from tender procedures in “very urgent and exceptional circumstances”.

The guidelines, seen by EconomyNext, allow for the cabinet to rely on a Standing Cabinet-Appointed Procurement Committee (SCAPC) or a “suitable” committee to expedite procurements above Rs 25 million.

On January 22, the National Medicines Regulatory Authority (NMRA) approved the Covishield vaccine for emergency use in Sri Lanka. An evaluation report published that day by the NMRA, according to Angunawela, makes it clear that the authority took just three days to evaluate the documentation sent by SII on January 19 via the Indian High Commission.

“Soon after, a cabinet announcement was made that the first donation of 500,000 doses of the Covishield vaccine would arrive on January 28, 2021. So a cabinet memorandum was prepared within three days of NMRA approval of the vaccine, and our first donation was received within a week of NMRA approval,” said Angunawela.

Sri Lanka received half a million doses of the Covishield vaccine on January 28 as a donation from the Indian government under India’s neighbourhood first policy. The first purchased batch of 500,000 arrived nearly a month later on February 25. In contrast, Bangladesh received its first five million doses of Covishield on January 25 out of a total 30 million doses purchased through a private agent.

As the NMRA had already approved the vaccine by January 22, said the lawyer, the cabinet had the authority to authorise an emergency procurement immediately, and a memorandum to that effect ought to have been placed before cabinet.

“In our opinion, if Sri Lanka was already receiving donations of an NMRA-approved vaccine by January 28, 2021, and the price of a dose of the said vaccine was predetermined, there is no further impediment in the procurement guidelines that prevent a ‘very urgent and exceptional’ procurement order to be placed within days of NMRA approval,” said Angunawela.

However, SPC Chairman Dr Prasanna Gunasena speaking to EconomyNext June 20 said there was no such delay.

“After registration, there were so many agreements going from our side to SII and vice versa. The administrative procedures take their own time, but the principle agreement to take the vaccines was made on the day of registration

“We can only pay when Serum sends us a pro forma invoice. I think less than four weeks to complete the process is a very good speed,” he said.

Gunasena further noted that Covishield was the very first vaccine to arrive in Sri Lanka, and the process was “laid down while ordering”.

“Just think how long it takes your company to procure equipment and compare that with this process,” he added.

Under normal circumstances, the government procures pharmaceuticals and related products through either the SPC or a private agent. Observers say the decision to sidestep private agents would’ve put the SPC in the unenviable position of having to directly deal with vaccine manufacturers all over the world.

Angunawela’s objection is that nowhere in the April 2020 procurement guidelines does it obligate the ministry of health or the cabinets to make emergency procurement through the SPC only.

“The cabinet has the authority to make procurements in the most expeditious manner available. The SPC is one of many options. When NMRA approval was given to the Covishield vaccine on January 22, the evaluation report makes no mention of SPC. It instead mentions Citihealth Imports (Pvt) Ltd as the local agent of Serum Institute,” he said.

“This may be contrasted with the NMRA Report on Sputnik V vaccine, where SPC is named the local agent,” he added.

The lawyer contends that the cabinet was free to procure Covishield from SII via the existing local agent, as authorised by the procurement guidelines.

“We are not aware of any official communication from Serum Institute insisting on working exclusively with SPC. In any event, a no objection letter was obtained from Citihealth Imports (Pvt) Ltd on February 03, 2021, under which Citihealth stated that it has no objection to SPC importing the Covishield vaccine directly from the Serum Institute,” he said.

The local agent’s no objection letter was also seen by EconomyNext.

According to Anugnawela, from January 22 to February 03, no action would have been taken towards placing an order with Serum Institute, as the SPC would have awaited the agent’s no objection letter.

“So in our opinion the government’s decision to procure through the SPC, which was not required by the procurement guidelines, did result in a delay. Moreover, even after February 03, 2021, it is unclear as to why no cabinet memorandum was expeditiously placed before cabinet, and no ‘very urgent and exceptional’ procurement was made as envisaged by the existing procurement guidelines,” he said.

On February 10 this year, Indian Deputy High Commissioner to Sri Lanka Vinod K Jacob said at a business forum in Colombo: “I am given to understand that Sri Lanka is placing large scale orders for more vaccines from India.” If Sri Lanka was indeed in the process of ordering the Covishield vaccine by early February, it has raised questions as to whether there were possible procedural delays.

In the South Asian region, Nepal had signed a deal with SII for two million doses of Covishield at USD 4 per dose and had later planned to order an additional five million at USD 5.5. However, the Kathmandu Post quoting Nepali officials reported on May 08 that SII’s local agents had asked for a 10 per cent commission per dose. The Nepal health ministry had then requested SII to sell the vaccine directly to the government by cutting the middlemen, but according to the Kathmandu Post, the Indian pharmaceutical giant had refused.

Meanwhile, on January 07, Bangladesh had approved the procurement of 30 million doses of Covishield from SII through the privately owned Beximco Pharmaceuticals Limited.

The Dhaka Tribune quoted Directorate General of Drug Administration (DGDA) Director Md Salauddin as saying on January 07 that Beximco Pharma would first supply the vaccine in meeting the government’s requirements, after which it may supply it to private hospitals approved by the government.

However, on February 04, Reuters quoted Beximco as stating that SII had delayed the first supplies of a COVID-19 vaccine for private sale, instead prioritising government immunisation campaigns and the World Health Organisation (WHO)-led COVAX facility. Beximco was the exclusive distributor of the SII-manufactured jab and had, by then, already received five million of the 30 million doses it had ordered.

Angunawela believes Sri Lanka followed proper procedure when ordering the Russia-manufactured Sputnik V and the Chinese Sinopharm vaccines, after each was approved by the NMRA.

“However, the procurement guidelines do not prevent the cabinet of ministers from appointing a competent committee to pre-negotiate the price of a dose. Such a Cabinet-Appointed Negotiating Committee was appointed for the Sputnik vaccine. But we are not aware of any such committee in the case of the Sinopharm vaccine. It may be necessary to inquire as to what led to the price differential between the prices at which Sri Lanka and Bangladesh purchased a dose of the Sinopharm vaccine,” he said. (Colombo/June22/2021)

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Sri Lanka Railways to seek PPPs to boost revenue streams

CURFEW RUSH: Commuters scrambling to get home after curfew was declared in Sri Lanka on March 20, 2020.

ECONOMYNEXT – Sri Lanka Railway department hopes to expand Public Private Partnerships and earn more non-passenger revenues to offset recurring operational costs, an official said.

“For the past 10 years, except the last few years, the Railway operational income only covers around 50 percent of the operational expense of the Department,” the General Manager of the Railway, D.S. Gunasinghe told EconomyNext.

“Our plan is to increase the non-passenger revenue of the Railway department.

“And we cannot expect and do not hope for money from the government.”

Sri Lanka Railways already has agreements with Prima, a food firm, and Insee Cement, which is bringing in additional income, Gunasinghe said.

“We had agreements for material transportation such as sand in the past, however it was canceled but we hope to start it again” he said.

The department will rent out its storage facilities and circuit bungalows for the tourism sector to create additional revenue streams.

Sri Lanka Railways recorded an operating loss of 10.3 billion rupees during 2021, compared to a loss of 10.1 billion rupees in 2020, the Central Bank 2021 annual report showed.

The total revenue of the SLR stood at 2.7 billion rupees, a 41.3 percent drop from a year ago.

(Colombo/ Feb 06/2023)

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Sri Lanka’s doctors distribute anti-tax hike leaflets to train commuters

ECONOMYNEXT – Doctors representing Sri Lanka’s Government Medical Officers Association (GMOA) distributed leaflets outside the Colombo Fort railway station against a progressive tax hike, threatening to address the government in a “language it speaks”.

GMOA Secretary Haritha Aluthge told reporters outside the busy Fort railway station Monday February 06 afternoon that all professional associations have collectively agreed to oppose the personal income tax hike.

“The government is taking a lethargic approach. They cannot keep doing this. They have a responsibility towards the citizens, the country and society,” said Aluthge.

The medical officer claimed that the government was acting arbitrarily (අත්තනෝමතික).

“If it cannot understand the language they’ve been speaking, if the government’s plan is to put all professionals out on the street, if it doesn’t present a solution, all professional unions have decided unanimously to address the government in a language it speaks, ,” he said.

Aluthge and other GMOA members were seen distributing leaflets to commuters leaving the railway station. Doctors in Sri Lanka in general are likely to earn higher salaries than the average train commuter, and a vast majority of Sri Lanka’s population, most of whom take public transport, don’t fall into the government’s new tax bracket. Many doctors, though certainly not all, collect substantial sums of money at the end of every month as doctor’s fees in private consultations.

About two miles away from the doctors, the Ceylon Blank Employees’ Union, too, engaged in a similar distribution leaflet campaign on Monday at the Maradana railway station. A spokesman promised “tough trade union” action if there was no solution offered by next week.

Sri Lanka’s cash-strapped government has imposed a Pay As You Earn (PAYE) tax on all Sri Lankans who earn an income above 100,000 rupees monthly, with the tax rate progressively increasing for higher earners, from 6 percent to 36 percent.

A person who paid a tax of 9,000 rupees on a 400,000 rupee monthly income will now have to pay 70,500 rupees as income tax, the latest data showed. This has triggered a growing wave of anti-government protests mostly organised by public sector trade unions and professional associations.

Even employees of Sri Lanka’s Central Bank recently joined a week-long “black protest” campaign organised by state sector unions against the sharp hike in personal income tax, even as Central Bank Governor Nandalal Weerasinghe said painful measures were needed for the country to recover from its worst currency crisis in decades.

The government, however, defends the tax hike arguing that it is starved for cash as Sri Lanka, still far from a complete recovery, is struggling to make even the most basic payments, to say nothing of the billions needed for public sector salaries.

Economists say Sri Lanka’s bloated public service is a burden for taxpayers in the best of times, and under the present circumstances, it is getting harder and harder to pay salaries and benefits.

Sri Lanka’s new tax regime has both its defenders and detractors. Critics who are opposed to progressive taxation say it serves as a disincentive to industry and capital which can otherwise be invested in growth and employment-generating business ventures. Instead, they call for a flat rate of taxation where everyone is taxed at the same rate, irrespective of income.

Others, however, contend that the new taxes only affect some 10-12 percent of the population and, given the country’s economic situation, is necessary, if not vital, at least for a year or two.

Critics of the protesting workers argue that most of the workers earn high salaries that most ordinary people can only dream of, and, they argue, though there may be some cases where breadwinners could be taxed more equitably, overall, Sri Lanka’s tax rates remain low and are not unfair.  (Colombo/Feb06/2023)

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Sri Lanka bond Yields end steady

ECONOMYNEXT – Sri Lanka’s bond yields closed steady on Monday, dealers said while a guidance peg for interbank transactions remained unchanged.

A bond maturing on 01.07.2025 closed at 32.15/30 percent, steady from Friday’s 32.05/10 percent.

A bond maturing on 01.05.2027 closed at 28.90/29.10, steady from Friday’s 28.90/20.05 percent.

The Central Bank’s guidance peg for interbank US dollar transactions appreciated by one cent to 361.96 rupees against the US dollar.

Commercial banks offered dollars for telegraphic transfers at 370.35 rupees on Monday, data showed. (Colombo/Feb 06/2023)

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