80-year monopoly ends in the public hospital medical air trade

An over 80-year monopoly in the supply of medical air for public hospitals has come to an end with the awarding of a Health Ministry tender to a 100 per cent Sri Lankan- owned company in open competitive bidding and after a legal battle.

This tender to supply medical air, which is used in ventilators, incubators and for administering anaesthesia in 33 public hospitals, was awarded recently to Gas World (Pvt) Ltd, an associate company of Industrial Gases (Pvt.) Ltd, which has been in the gas business for over 25 years, Health Ministry officials said.

The contract was to supply, deliver and unload medical air as well as to provide maintenance services for the storage of gas and gases in liquefied form.

Challenging this decision, a Fundamental Rights (FR) case was filed in the Supreme Court in September 2017 against the award by one of the bidders, Ceylon Oxygen PLC, who had lost 32 hospitals and won only seven hospitals from a competitive open tender published in October 2016 only because of their high prices, they said.

There were only two applicants, since the qualification to bid required a minimum of three years of supplying medical gases to public hospitals successfully, locally registered company with the Good Manufacturing Practices certification issued by the National Medicinal Regulatory Authority, Ministry of Health, Nutrition and Indigenous Medicine and many other requirements in the tender procedure.

The selection was challenged by the less successful bidder and the long term supplier of medical air, Ceylon Oxygen PLC, on several grounds including "ambiguous and vagueness associated with the terms and conditions" of the tender by the petitioner, after awarding the tender.

During the court proceedings, the petitioner was questioned as to why they did not file the petition at the time of tendering or why not clarifying during the "Pre-bid meeting" scheduled in the tender document and held on November 21, 2016.

The petitioner Ceylon Oxygen and Gas World Company were given the same tender document to submit the bids, both were asked to submit their concerns 10 days prior to the "Pre- bid meeting" by the tender document itself.

All the previous agreements were not from open competitive tenders like this, but were signed under monopolistic situation, where the Hospital Directors or the ministry did not have a choice other than ordering at the prices what the Ceylon Oxygen invoiced.

The majority shareholding of Ceylon Oxygen is the Munichheadquartered Linde Group which is what Ceylon Oxygen has mentioned in filing the case but they have the 100 per cent ownership and no local ownership, the respondent company alleged in its submissions.

But the Gas World incorporated medical arm of Industrial Gases Ltd, is 100 per cent owned by Sumith Guruge and Ms. Aneesha Guruge who are Sri Lankans, the company said.

The petition cited 50 respondents, including Health Minister Rajitha Senaratne, Health Ministry Secretary Jagath Sugathadasa and the Directors and Medical Health Officers of 32 hospitals.

The first respondent, Gas World was represented by President's Counsel Romesh De Silva, President's Counsel Harsha Amerasekera, and Attorneys- atLaw Rahal Guneratne and Shehan Gunawardene.

The petitioner stated that it has provided medical gases to the Health Ministry for more than 80 years, but the Linde Group is in full control for the last seven years only.

The two- judge Supreme Court bench refused leave to proceed on the application.