
THIRUVANANTHAPURAM: In what is certain to stir up ripples in the state politics, the CAG has rejected the Kerala government’s contention that pandemic-time exigencies had forced it to procure PPE kits at a very high price when the state was in the grip of Covid-19.
In its report, ‘Performance Audit on Public Health Infrastructure and Management of Health Services’, which was released on Tuesday, the CAG said PPE kits were purchased for Rs 550 apiece on March 28, 2020. Just two days later, another purchase was made for the price of Rs 1,550 each, leading to an additional expenditure of Rs 10.23 crore.
A new supplier, who charged 300% more than the standard rate, was among those from whom this procurement was made. The audit has found that the government overlooked companies offering lower-priced products and favoured new suppliers, resulting in these inflated costs.
The CAG had heard the government’s explanation in November 2024. According to the report, the Kerala Medical Services Corporation Ltd. (KMSCL) ignored a firm that was ready to supply PPE kits at a lower rate, and opted to buy from other vendors at much higher prices.
During the pandemic, the government had set a fixed rate of Rs 545 per unit to regulate market prices. However, the vendors KMSCL chose were charging between Rs 800 and Rs 1,550 per unit. In a questionable decision, KMSCL reduced its purchase order from the firm offering the base rate (from 25,000 units to just 10,000 units) and increased orders (15,000 to two lakh units) from others charging significantly higher rates.
“Although procurement was made during an emergency, this does not justify cancelling orders that were more economical for the government. The purchases made from new suppliers at much higher rates resulted in additional expenditure of Rs 10.23 crore,” the report stated.
Additionally, the report found that KMSCL advanced the full payment for the purchase of PPE kits from a new company, San Pharma, without verifying the quality of the products. This advance payment exceeded the authorised limits set by the State Level Crisis Management Group (SLCMG), and the full payment was made for kits priced at Rs 1,550 each, though their quality had not been confirmed. The audit also rejected the government’s claim that the advance payment to the supplier represented only 29% of the total purchase value.