Nepal signs non-disclosure agreement to buy Chinese Covid-19 vaccines but legal questions remain

With the country in desperate need of Covid-19 vaccines, the government has signed a non-disclosure agreement with the vaccine maker Sinopharm to procure Chinese shots despite questions whether such an agreement can be signed legally remains unanswered.

With the country fighting the deadly second wave of the coronavirus pandemic, the government sought to procure vaccines from the Chinese company amid uncertainty of availability of vaccines from other sources.

"The non-disclosure agreement was signed on Friday between the Department of Health Services and Sinopharm electronically," an official at the department told the Post on condition of anonymity. "After the Health Ministry authorised the director general to sign the agreement with Sinopharm, the agreement was signed."

Sinopharm's proposal for a non-disclosure agreement had created a dilemma among Health Ministry officials as Nepal's laws don't provision non-disclosure agreements in public procurement.

"After we state the quantity of vaccines to be procured, Sinopharm will quote the prices," the department official said. "Then the procurement process will move forward. I cannot say when the vaccines will be available."

According to Roshan Pokharel, chief specialist at the Health Ministry, the government had proposed to buy 10 million doses but the Chinese have said they cannot make that quantity available immediately.

"We will initially get probably two million doses," he told the Post.

The Chinese government has already given Nepal 1.8 million doses of the Sinopharm vaccine in grants--800,000 doses in March and an additional one million doses in early June.

The second grant of 1 million will be administered to 60 to 64 year-olds.

Those above 65 years, who were given their first doses of the Covishield vaccine in March, are yet to get the second dose as India barred the export of vaccines as a result of which the Serum Institute of India is yet to supply 1 million doses Nepal has already paid for. Supply from the COVAX facility remains uncertain too.

But in the case of Nepal buying the vaccines from Sinopharm, the legal basis of the non-disclosure agreement remains unclear.

Nepal's Public Procurement Act 2007 and the recently introduced Covid-19 Crisis Management Ordinance are silent on non-disclosure agreements, even though both allow the government to procure directly from suppliers or manufacturers without competitive bidding under extraordinary situations.

In late May, an official at the Public Procurement Monitoring Office told the Post on condition of anonymity that except in a situation where the government decides to procure defence-related materials, which are sensitive from a national security point of view, details of all other procurements must be disclosed as per the existing law.

In the absence of legal ways to procure vaccines under non-disclosure agreement, there have been discussions on procuring them through policy decisions of the Cabinet, according to the officials at the Health Ministry.

They said that government officials will not put themselves at risk of potential investigation by the Commission for Investigation of Abuse of Authority by signing the procurement agreement without a legal backing.

"If the existing procurement law and the ordinance don't allow us to procure the much-needed vaccines through the non-disclosure agreement, the procurement process can move ahead only through a policy decision of the Cabinet," Dr Taranath Pokharel, director at the Family Welfare Division of Nepal's Ministry of Health and Population told the Post. "I think the cabinet will take a decision to facilitate the vaccine procurement in the current pressing time."

The Commission for Investigation of Abuse of Authority cannot investigate the policy decisions of the Cabinet.

Section 4 (B) of the Commission for the Investigation of Abuse of Authority Act-1991 states, "The Commission, pursuant to the Act, shall not take any action in matters relating to any business or decisions taken at meetings of any House of Parliament or of any committee or anything said or done by any member at such meetings, or any policy decisions taken by the Council of Ministers or any committee thereof or judicial actions of a court of law."

Dipendra Raman Singh, director general of the Department of Health Services, said that the policy decision of the Cabinet was one of the options being discussed to procure vaccines from Sinopharm.

According to another department's official, discussions are underway on procuring under different modalities such as government-to-government agreement, government-to-company agreement, and procurement through normal process after policy decision from the cabinet.

"But no proposal regarding the policy decision from the Cabinet on the issue has been tabled at the Cabinet so far," Hridayesh Tripathi, the outgoing health minister, told the Post.

There is another hurdle too regarding a non-disclosure agreement.

Even if the Cabinet decides to allow the government to keep the price and other particulars secret, it will be complicated for the government to secure foreign aid to procure vaccines if foreign donors are not shared details about procurement deals.

According to the Finance Ministry, the majority of the budget for the procurement of vaccines is expected as loans from donors like the World Bank and the Asian Development Bank.

On April 2, the government and the World Bank signed an agreement for a loan worth $75 million to support access to safe and effective Covid-19 vaccines for Nepal's prioritised populations.

Finance Secretary Sishir Dungana told the Post last week that the government was finalising a loan deal of $165 million with the Asian Development Bank mainly aimed at procuring the Covid-19 vaccine.

One of the provisions in the proposed non-disclosure agreement is that the information from the agreement cannot be disclosed to any third party, which in general is a key condition, according to a Health Ministry official.

"But if we procure any goods or services with the money received from donor agencies like the World Bank and the Asian Development Bank, we have to send all the procurement-related documents to them," the official told the Post last week on condition of anonymity.

The Department of Health Services official, however, said that despite a broader non-disclosure agreement, specifics of what specific information could be shared and what not would be determined during the procurement agreement.

"I think the Finance Ministry is also on board regarding the procurement of Chinese vaccines and it will deal with the donors regarding the matter," the official said.

Vaccine manufacturing companies from many countries have made non-disclosure agreements a norm to sell precious vaccines across the world.

In December last year, Reuters news agency reported that Kazakhstan had signed a non-disclosure agreement with Pfizer, the US-based vaccine maker. Bangladesh announced on May 18 that it had signed a non-disclosure agreement with Sinopharm, according to a report published in The Daily Star. Bangladesh had also signed a non-disclosure agreement for production of Sputnik V vaccine in Bangladesh, according to the report.

But such 'secret' deals could also mean that the taxpayers would never know the actual price the government is paying to the drug companies from taxpayer funds.

The New York Times reported in January that an accidental revelation that the US taxpayers were paying $19.5 per dose for the Pfizer vaccine, while Europeans paid just $14.70 per dose, had caused quite a stir.

The coronavirus, which has so far killed over 3.72 million people worldwide, continues to remain a massive threat to countries like Nepal.

On Sunday Nepal reported 3,024 new infections taking the total tally to 588,124 of which 89,217 are still active. The Ministry of Health reported 99 more deaths taking the official toll to 7,898.

Vaccine, therefore, has become the world's newest diplomatic currency. And countries that have developed vaccines or are manufacturing them as well as drug companies do not want to share details while doing business. Governments worldwide are currently buying vaccines either directly from manufacturers or through the governments of vaccine-manufacturing countries.

The Nepal government has not cut any deal with any vaccine manufacturing firm, except the one it signed with the Serum Institute of India in February. But Serum failed to provide 1 million of the 2 million doses for which Nepal paid. Nepal had agreed to buy the 2 million doses from Serum at $4 per dose. The deal did not involve a non-disclosure agreement.

Nepal had planned to buy an additional 5 million doses from Serum, but with India itself sliding into a devastating crisis after a sudden surge in Covid-19 cases, vaccine supply from the south immediately is unlikely.

Nepal will receive vaccines from the United States. On June 3, the US government announced approximately 7 million will be distributed to the Asian countries including India, Nepal, Bangladesh, Pakistan, Sri Lanka, Afghanistan, the Maldives, Malaysia, Philippines, Vietnam, Indonesia, Thailand, Laos, Papua New Guinea, Taiwan, and the Pacific Islands.

"Vaccine is the most effective measure against this pandemic," said Dr Binjawala Shrestha, assistant professor at the Department of Community Medicine under the Tribhuvan University Institute of Medicine. "Once we get additional vaccine doses from China and other countries, we should run vaccination drives in every district without delay."

Copyright: The Kathmandu Post/Asia News Network