Former Masaka hospital boss quizzed over UGX2.5bn inflated contract, missing cash

MPs on Parliament’s Committee on Public Accounts-Central Government have put former Masaka Regional Referral Hospital Director Dr. Nathan Onyachi on the spot for a Shs2.5 billion contract inflation.

Dr Onyachi has told Parliament’s Public Accounts Committee (Central) that he approved a 24 per cent contract price increment for a hospital complex, without prior clearance from the Attorney General.

The increment worth shs2.5 billion raised MPs’ eyebrows, owing to Dr Onyachi’s failure to follow requisite Public Procurement and Disposal of Assets regulations in the transaction.

Dr Onyachi attributed the increment in the total contract price for the construction of a Maternity and Children’s Complex, to changes in costs of inputs used in the project.

He said this while appearing before the Committee on Thursday, 28 July 2022, to answer to audit queries raised by the Auditor General.

The procurement issue was observed by the Auditor General in his review of budget releases to Masaka Regional Referral Hospital for the financial year 2020/2021.

The contract signed with Tirupati Development (U) Limited on 30 May 2014 to execute the project, was costed shs10.6 billion but was later revised to shs13.1 billion.

The Auditor General observed that although the contractor recommended an increment of shs2.5 billion, no independent technical audit of the project was done by Health Ministry engineers to establish the cost of the remaining civil works and the condition of the contract.

He also cited Regulation 55 6(c) of the Public Procurement and Disposal of Assets (Contracts) Regulations 2014 which states that a contract amendment shall not be issued to a provider without obtaining approval from other concerned bodies including the Attorney General.
“I noted that the Director communicated price increment to the contractor without the approval of the Attorney General. In the absence of adequate documentation and required approvals makes it difficult to confirm the authenticity of the price increments,” observed the Auditor General.

According to Dr Onyachi, the slow release of funds from the Government caused the contract which was expected to initially run for three years, to be extended several times.

He said prices kept increasing and in 2018, the contractor asked for a price increment variation at shs3.3 billion with evidence from Uganda Bureau of Statistics, which was handed over to the supervising engineer to verify the claims.
“The information was shared with the Ministry of Health Infrastructure Division and eventually an approval of a price increment variation of shs2.5 billion was made,” Dr Onyachi said.

While chairing the meeting, Sarah Opendi (NRM, Tororo) tasked the Dr. Onyachi to justify his approval of the shs2.5 billion contract variation price without input from the Attorney General, Solicitor General and PPDA.

In response, Mr  Dismus Wandera, the hospital Procurement officer told the Committee that during the course of the project, some items kept changing like the functionality of the rooms and putting some material that was not initially in the design.

He added that the project is at 96 percent works, however, they are “grappling with extra works requiring an additional shs1.7 billion”.

Dr Onyachi told the Committee that the hospital management has submitted two variation claims to the Solicitor General for clearance, where one has been approved whereas the other remains pending.


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