Questions as Treasury to pay Sh8bn for Covid vaccines not delivered

TAXPAYERS are set to shoulder a Sh8.2 billion bill for Covid-19 vaccines that were never delivered and later destroyed in a European warehouse without proper oversight from government officials.

A new audit has revealed that the National Treasury has acknowledged the liability by writing a letter proposing the modalities of settling the debt owed to the Belgian supplier.

Auditor General Nancy Gathungu has detailed the findings in a report on the Covid-19 Health Emergency Response Project for the year ending June 30, 2025, tabled in Parliament on November 6.

According to the audit, the Ministry of Health, through the African Vaccine Acquisition Trust, committed to purchasing a substantial consignment of vaccines.

However, after only 1.8 million doses were delivered, the demand for vaccinations went down following the World Health Organization’s declaration that the pandemic was no longer a global emergency.

This left a balance of 2,721,600 doses, valued at $64 million (approximately Sh8.2 billion), that had been manufactured but were no longer needed.

The audit report states that the vaccines, which never left a warehouse in Belgium, were subsequently destroyed in August and October 2024.

“These unshipped vaccine doses were indicated as no longer needed and were destroyed in the months of August and October 2024 as per the destruction certificates,” the report reads.

The National Treasury is preparing to pay the full amount to Johnson & Johnson, for the destroyed vaccines as per the audit report.

Gathungu has raised concerns about the events, first citing that there was no evidence of approval by the Cabinet, putting the concerned implementing agencies led by the Health ministry on the spot.

The Auditor General says her investigation uncovered that there was no approval to destroy doses, casting doubt on the financial commitment of the stated magnitude.

Furthermore, and perhaps more alarmingly, the audit found no proof that a Kenyan multi-agency team of experts ever travelled to Belgium to verify the fundamental facts.

Officials failed to physically confirm whether the vaccines had actually been manufactured, check their expiry status, or witness the destruction process firsthand.

“There was no evidence that the multi-agency team, made up of critical experts, the user department and mandate holders from the Kenyan government visited the warehouse in Belgium to verify whether the vaccines had been manufactured, their expiry status and witness the destruction exercise,” the report reads.

This means the government relied solely on the ‘destruction certificates’ from the manufacturer and the word of the supplier, pointing to how procurement rules were ignored.

“In the circumstances, the value for money was not realised,” Gathungu said in the report, which now awaits a review by the House’s audit committees.

The project management in the report acknowledged the observation, stating that the country did not need the vaccines after the pandemic threat had receded.

They revealed that attempts to negotiate a substitute product from the manufacturer, Johnson and Johnson, failed. The ministry says J&J said they had already manufactured the vaccines.

“AVAT team says that Kenya has to meet its obligations and pay for the vaccines even though they will not be used,” the report reads. Kenya, AVAT, and Afrexim Bank entered into a participating agreement in May 2021 for the procurement of Covid-19 vaccines.

Management required the government to procure a minimum of 10 million doses at $10.

The government placed an order for 13.3 million vaccine doses.

However, delivery was only for 1.8 million doses, with the balance pending deliveries.

Management said a further 2.7 million was manufactured but not shipped.

The unshipped component was indicated as no longer needed and was due for destruction, as per the ministry brief to auditors.

It is emerging that the management was waiting for Cabinet approval, as at the time the audit review was concluded.

AVAT wrote to Kenya on June 10, 2024, indicating that the bill had accrued to the Sh8.2 billion, being the cost of the vaccine and accrued interest of $7.1 million (at that time equivalent to Sh930 million).

AVAT asserted that the vaccines were made available for delivery as per the terms of the contract, pointing to the decision by MOH as not affecting the claim.

The Health Ministry indicated that the government had engaged the Afrexim Bank to have the interest waived by the bank had not acceded to the request as at the time of the audit.

“We agree with the auditor’s observation,” the management response reads, adding that the order was shelved after the WHO declared the virus no longer a public emergency.

“AVAT team says that Kenya has to meet its obligations and pay for the vaccines even though they will not be used,” the report reads.

The management adds that, “We are awaiting a Cabinet decision on this matter, having submitted a Cabinet memo to the Health Cabinet Secretary.”

The Sh8.2 billion liability comes on top of other financial losses identified in the audit, including ongoing commitment fees on undrawn loans intended for vaccine purchases that were never made.

It has since emerged that the government has failed to withdraw or utilise some Sh8.7 billion that was committed by the bank on the Covid-19 response project.

As a result, the amount attracts Sh43 million every year in commitment fee, worse off in the face of the project having been closed on September 30, 2025.

“This is making it difficult to utilise the remaining funds within the remaining period,” Gathungu said, pointing to the violation of the public finance laws.

“In the circumstances, management was in breach of the law and an unnecessary commitment fee at a rate of 0.5 per cent per annum may be incurred,” the report reads.

The revelation has cast a dark shadow over the otherwise positive performance of the multibillion-shilling project, which was largely hailed as successful in bolstering the country’s health infrastructure.

The Covid-19 emergency response project is credited with helping a number of hospitals get testing labs, medical oxygen, and waste management systems.