Punjab’s oxygen crisis

In the midst of a worsening pandemic, government tenders are being given to inexperienced, blue-eyed firms.

As the Covid-19 crisis escalated in India over the past few weeks, there began to trickle in harrowing images and videos of people unable to get medical assistance. The reason this global pandemic has halted life as badly as it has is not because Covid-19 is a particularly deadly virus, but because it is extremely infectious. 

While most people do only get minor symptoms that can be treated at home, so many people get it so quickly that the people that do need medical attention are enough to overwhelm even the best and most sophisticated healthcare systems in the world. That is why social distancing and masks are so important, so that the spread of the virus slows down and healthcare systems can cope with the influx of new patients while still dealing with all of the other healthcare needs that people have. 

In Pakistan, the fear was that an already crumbling health infrastructure would collapse under the burden. But Pakistan remained lucky, perhaps due to a young population, and while hospitals came to full capacity in each wave they were never completely overwhelmed and overpowered. Looking at the third wave in India, however, was a cause for anxiety in Pakistan where people began to worry about the third wave finally overpowering the healthcare system.  

Tensions grew higher when it started being reported that oxygen tanks and ventilators were almost at capacity with more than 90% gone. Covid-19 causes serious respiratory symptoms when the virus attacks the lungs. Air consists of 21% oxygen, and the remaining gases are a combination of Nitrogen and noble gases. This 21% oxygen is enough for healthy lungs, but with limited lung function caused by Covid-19, the lungs need medical grade oxygen. This has been known about Covid-19 from the very beginning, so when reports started arriving that more than a year into the pandemic Punjab was facing an oxygen shortage, questions were raised about what the government has been doing since the pandemic started. 

According to an official of Primary and Secondary Healthcare Department (P&SHD) Punjab, from the onset of the first Covid wave it was obvious that the demand in oxygen was set to increase in proportion with infections.  “There was a shortage in supply of oxygen leading the authorities to consider alternate options to meet the demand. The health authorities in Punjab Govt pondered upon the idea of making hospitals self-sufficient by installing oxygen generation plants across the health facilities to cater for the increased demand,” said the official. 

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“The major suppliers of oxygen gases engaged with the Secretary specialized healthcare Punjab and assured him of an increase in production in an attempt to offset the concerns of a possible catastrophe resulting from lack of supply to hospitals. However, based on the assurances, the health secretariat scrapped the project of oxygen generation plants. During this time the positivity ratio dropped as well easing the woes of officials albeit temporarily,” he said.

This is essentially where things went wrong. When the initial force of the pandemic was blunted, the Punjab government stopped procuring oxygen to try and shore up the province’s capacity. Then, when Covid-19 hit again in March 2021 with mutated versions of the virus, they were caught unaware. 

Dires straits

“The mutated virus has evolved to be far more infectious with enhanced ability of transmission and accelerated pulmonary damage requiring oxygen therapy during early stages of hospitalization. This is exactly what is being witnessed in India. The run up to increased infections caught the authorities completely off guard not being able to withstand the surge in demand and to plug the gap in supplies,” explains another source at the health department. 

And after looking at what was happening in India, the concerns were increasing. India is far more industrialized, ranked as second largest steel producer, steel industry being one of the major consumers of oxygen other than medical use, and even India could not cope up with shortage of oxygen despite cutting off supply to the steel industry.  “Pakistan shares a lot in common with India considering the socio economic and cultural similarities, dense population with the general population being naïve of the lethality of Covid.  It is just a matter of time until the Indian variant gets introduced in Pakistan leading to a snowball effect in resurgence of Covid cases,” says the source.

The official informed that it was just recently that the authorities realized that the storm of a third wave was just at the doorstep and Pakistan may soon start reeling with Covid wave similar to India. “It seems that the government only took heed based on the political repercussions that the third wave meant for the BJP Government. The Sindh government claimed to have approved Rs1 billion for the revival of a faulty oxygen plant of Pakistan steel mill.  Restoration of a faulty oxygen generation unit well over and beyond its operational life being 40 years old does not make sense.” 

“Since restoring the plant requires engineering and parts from the local representative of the same manufacturer will provide the liberty to charge the desired amount for repairs. There is no guarantee on operational capability and assurance on how long would the repairs last post maintenance. Another question arises on doing the cost benefit analysis of restoring the plant vs investing the same amount in procurement of oxygen generation plants enabling hospitals to produce onsite oxygen.”.

The official added that Punjab, on the other hand, took the initiative back in July 2020 of moving forth with procurement of 15 oxygen generation plants via Project Management Unit under the Punjab health department. However, the project was scrapped and never proceeded as according to the PSH&MED, the oxygen suppliers assured of increase in production downplaying the possibility of shortage. It was only until recently that the panic bells rang as the producers of oxygen voiced their concerns that they may not be able to meet the supply. The Project Management Unit under Punjab health department intended to proceed with the tender last year for DHQ hospitals all across Punjab, but the project was scrapped once the Covid cases subsided. It was also due to this reason that gas companies assured the Govt that there will be no shortage of oxygen. This statement was based on a conflict of interest as the gas companies never want the health institutes to become self-sufficient..

Emergency measures

However, according to the official, the PSH&MED floated an emergency tender for procurement of 10 large oxygen generation units tender on emergency basis. The tender was called on the 7th of May on a Friday afternoon calling for bid submission by the following Monday on 10th May, making this the government’s over the weekend plea to get ahead of the shortage. 

“This allowed for a very narrow window for the bidders to submit bids. Upon reviewing the bidding documents it was noticed that the department issued a premium to bidders for early supply.The current tender is  for 10 oxygen generation units , each with a capacity of 1000 litres per min. Combined output will be 10,000 litres per min , in simplified terms , enough oxygen to support 1,000 Covid patients as the oxygen requirement of a Covid patient is between 8 litres to 12 litres per min, depending on severity of disease. The allocated budget for the oxygen generation plants by PSH&MED is RS 600 million for 10 units of 1000 litre / min,” they said.

The question arises as to whether the tender issued by the PSH&MED includes vendors that are experienced and able to deliver on time or it is going to be the traditional thing to give tenders to the blue-eyed companies and take kickbacks in return. Health department officials that Profit spoke to said that an investigation had been conducted on such accusations, and that it had been revealed that some blue eyed companies that have no previous experience of supplying oxygen generation plants are also being considered for qualification. 

Another source said that in fact there are no figures yet to estimate how much oxygen Punjab has or how much oxygen it may need in the future, meaning basic research has still not been conducted but these firms got contracts over the weekend. “There is no gauge to determine the insufficiency of oxygen, however the publicly available statements from the Govt that all oxygen produced was being diverted from the industry to health facilities and the gap between overall consumption and production was at 10% is of great concern.” 

“In case of further upsurge of cases the consumption will outpace the production paving way for scenes being witnessed in India. However, this time too the tender is going to be awarded to the companies that are favoured by people in power, even though they have no experience. Having gone through multiple technical evaluation reports uploaded on PPRA’s websites it was observed that a local past performance and reference was mandatory for products such as an ECG machine and blood pressure monitor. However, procurement of a mission critical system such as an oxygen generator system no past performance criteria or references were made mandatory,” he revealed.

The source further revealed that it seemed the committee formed for evaluation of the bidders was pushing for competition between two selected firms. “This would justify the grounds of price based competition and tender will be awarded to the so called ‘lowest bidder’,” they said. When asked how it would be possible that those two firms will collude for an engineered outcome he replied with an example of a recent tender in Wazirabad Institute of Cardiology for Modular Operation Theatre. 

“This is mostly done via creating specifications which no other firm can fulfill , or creating a package of various equipment so that only two firms can participate and qualify. The tender goes to the “lowest”. The high profit over and above market price  are split between the two or the losing firm is given an opportunity to win in the next tender. The specs in the tender of Wazirabad Institute of Cardiology for Modular Operation Theatre were prepared so that only two firms were able to offer the desired equipment combination of heart lung machine and modular operation theaters. Both firms were technically qualified leading to financial opening and the price was well over and above the estimated budget.  When our research team search the reports of tenders on various public sector online portals it was observed that there are at least 4 vendors of heart lung system and 5 offering modular operation theaters, however only two vendors were able to offer the required combination of heart lung machine and modular operation theatre for tender in Wazirabad Institute of Cardiology.  We did some online research to determine the price of a heart lung system and our search from the import database of India Zauba revealed the price of heart lung machine to be 85,000 USD whereas the quoted price of the lowest bidder for Wazirabad Institute of Cardiology is 180,000 USD.  The issue of misprocurement within the health sector has been overlooked and completely unabated without due checks and balances.  Vendors who are part of the procurement being aware of malpractices hesitate raising their voice due to the backlash from the procuring authorities. The others involved in the procurement process have vested financial interest. Usually, the people at the institute level are biomedical engineers, and end-users at secretariat level and the committee of end users. This is often a handpicked group of advocates of those firms.” 

The possible consequences

Warning about the tender going into the hands of inexperienced people and its ill effects, the source said that the oxygen generation plant being specialised equipment which needs to operate 24/7, oxygen to covid patients is what water is to a fish. Inexperienced firms and manufacturers with a poor track record or who have been in the trade for less than a decade are still in the process of improving their R&D to come with better versions of their product. This implies that they are more prone to faults and frequent maintenance delays. If experienced firms will be honing their skills over a mega project of 10 installations, this could lead to delays in commissioning poor after-sales support due to lack of experience, false sense of security to the institutes that their oxygen needs will be fulfilled. 

“Will you be comfortable being on a transatlantic flight on a plane manufactured by someone who has been in this business for less than a decade and being flown by a pilot who just received his commercial license. In such a technical and sensitive procurement the authorities shall follow cost quality criteria set forth by PPRA. In case it is not possible for the procuring authority to float another tender due to lack of time , they should exercise due diligence in vetting the past performance of manufacture as well as that of the local distributor,” said the source.

According to an official within the health department the best way to mitigate the crisis of oxygen shortage is to equip the hospitals with oxygen generation plants.  “Based on the global events and forecasts it was written on the wall that Pakistan will soon face an oxygen shortage. The Government should have proceeded with procurement of oxygen plants last year instead of scrapping the project.  As per situation now, the leading manufacturers are inundated with orders from South Asian countries , primarily India. This has left the health department not with many options but to relax the procurement criteria. It may be the case that the order be placed to vendors with no past experience and lowest rates. Placing the order may be one thing but the ability, knowledge and the technical experience matters the most when it comes to installation, commissioning and post-sales support. Preference shall be given to firms who have a proven track and successful installations.” 

In addition to this, oxygen generation units are able to pay off the costs within a span of 2 to 3.5 years hence it is an investment worth making even once the pandemic is over. There are some successful installations of oxygen generation plants in hospitals like Rawalpindi Institute of Cardiology and Bahawalpur Victoria Hospital.

“Typically health procurement in Punjab has been marred with controversy with allegations of awarding contracts to a selected few and “blue eyed” firms.  We doubtfully anticipate that this procurement to the tune of Rs600 million will be transparent. The bid evaluation report for the emergency tender uploaded the following day was rather in line with the overall perception of procurement. None of the 18 participating firms were technically qualified, even the ones with a well established track record of oxygen generation plants were disqualified on unjustified grounds.  Based on the global events and forecasts it was written on the wall that Pakistan will soon face oxygen shortage.” 

As per the situation now, the leading manufacturers are inundated with orders from South Asian countries, primarily India. This has left the health department not with many options but to relax the procurement criteria. It may be the case that the order be placed to vendors with no past experience and lowest rates. Placing the order may be one thing but the ability, knowledge and the technical experience matters the most when it comes to installation, commissioning and post-sales support. Preference shall be given to firms who have a proven track and successful installations. According to a vendor who participated in the bidding process and did not want to be named, this was being done to facilitate the “ favorites”. The vendor further added that if it is an emergency tender then the qualification criteria shall be based on vendors with past performance on oxygen generation systems.  

“Procurement is part of the answer to the problem, the expertise to install, commission and train the institutes on use of the system is a key factor being overlooked. From the overall synopses of events and “past performance” of the procurement authorities within Punjab health there is little hope that this critical procurement in times of crises will be performed on the basis of due merit,” they said.

On the other hand, Punjab Health Minister Dr Yasmeen Rashid told Profit that it is not at all the case that such an important tender falls into the hands of an inexperienced firm or any purchase is made at a price higher than the market price or out of merit. “The decision to procure oxygen has been made at the government level and this procurement is being done not only through the PSH&MED but also through the primary and secondary healthcare department. The Punjab government has allocated funds for the purchase of oxygen and no delay will be tolerated,” she said. 

“The government has installed an oxygen unit at Jinnah Hospital. However, the transparency of the said tender will also be closely monitored and all procurement will be in accordance with the PPRA rules and rates. Procurement has started at the government level. Technical teams have been formed in the department for the said tender which will look after the entire process in a transparent manner. The company/firm who is technically sound and completes all the SOPs will be awarded the tender.” 

Shahab Omer
Shahab Omer
The writer is a member of the staff and can be reached on [email protected]

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