New Telegraph

Contract breach: Trouble brews over Customs’ concession to Chinese, others

•FG may lose over N980bn on litigation fees

 

 

As the Federal Government re-awards the 20-year contract it had with Messrs Adani Mega Systems Limited/ Webb Fontaine for the automation of Nigeria Customs Service to a Chinese IT firm, Huawai and others, PAUL OGBUOKIRI reports that a contract litigation arising from the action, is one too many as the country is facing several of such cases in Nigerian courts and around the world including the celebrated P&ID case going on in London. Excerpts..

 

Government could lose over N980 billion on litigation fees

 

With the recent announcement by the Minister of Finance and Budget, Mrs. Zainab Ahmed that the Federal Executive Council has approved a concession agreement with a consortium led by Chinese firm Huawei for the automation of Nigeria Customs Service (NCS) for a period of 20 years, indicate that Federal Government have ignored a piece of advice by “the Solicitor General of the Federation to the Minister of Finance urging it to consider the strength and weakness as well as litigation fees of $2.5billion (about N980 billion) and lengthy time frame of embarking on this case and how that may affect the ultimate goal of government for revenue generation”.

 

The announcement after the Federal Executive Council (FEC) meeting last week by the Minister of Finance and Budget Planning, Zainab Ahmed that FEC has approved the concession of the Nigeria Customs Service (NCS) to a consortium led by Bionica Technologies West Africa Limited, Bergmans Securities Consultants and Supplies Limited, African Finance Corporation (Lead financier), and Huawei of China (Lead technical service provider) for the modernization of Nigeria Customs Service on Build, Own and Operate arrangement for 20 years.

 

This came as the consortium earlier given the job had instituted a suit challenging the cancellation. The suit which was filed in December 2018 at the Federal High Court Abuja with suit No FHC/ABJ/CS/850/2017 will likely stall the recent award of the contract to another consortium.

 

Also, a report of the House of Representatives joint committee that investigated the agreement, disclosed that the Federal Government acted in breach of the earlier contract award terms with Messrs Adani Mega Systems Limited/ Webb Fontaine consortium that must have responded to a June 20, 2016 advert.

 

The joint committee in the report further noted: “In line with section 42 (1a) of Procurement Act 2007 the Bureau for Public Procurement (BPP) on April 11, 2017, granted certificate of no objection to the CBN recommending Messrs Adani Mega System Limited/Webb Fonntain for the award of the project contract.

 

“That Central Bank of Nigeria-Technical Committee (CBN-TC) on Comprehensive Import Supervision scheme (CISS) as established by law through Pre-shipment Act for import and export is the organ responsible for the implementation of the Act as captured in sections 13 (1), 15(1) and 5 “The CBN-TC on CISS on behalf of the Federal Government engaged and signed contract with Messrs Adani Mega Systems Limited/Webb Fountain on a Build, Operate and Own agreement,” the report concluded.

 

Late Abba Kyari mentioned in re-award of contract

 

Meanwhile, the House of Representatives Joint Committee report which was jointly signed by James Abiodun Faleke, Chairman Finance; Jerry Alagbaoso, Chairman Public Petitions; Yuguda Hassan Kila, Chairman Customs; Lawali Ibrahim, Clerk to Committee on Finance and Aliyu Maccido, Clerk to Committee on Customs revealed that the controversial cancellation and re-award of the contract took place during the time of the late Chief of Staff to President Muhammadu Buhari, Mallam Abba-Kyari

 

The report said: “The Presidency through the office of the Chief of Staff to the President issued a letter dated 17th September, 2019 engaging the consortium titled Presidential Initiative on Customs Modernisation to carry out the same project awarded to Messrs Adani Mega Systems Limited/ Webb Fontaine seven months after they were engaged by CBN- CISS.

 

“It is the opinion of the Committee that the Presidency was not duly informed of the existing contract agreement and litigations filed by Messrs Adani Mega Systems Limited/ Webb Fontaine.”

 

Main objective of Custom concessioning

 

The Minister of Finance and Budget Planning, Ahmed Zainab said: “The main objective of this project is to completely automate every aspect of the customs business and to institutionalise the use of smart and emerging technologies that will enhanced the statutory function of the Nigerian Customs Service in the areas of revenue generation as well as trade facilitation and enhancement of security.”

 

She said the project, to be delivered by Messrs E. Customs HC Project Limited, would be financed by sponsors “who will in return look over the investment in the concessionary period of 20 years” while it has the potentials to generate up to $176 billion for the country.

 

“So this investment of $3.1 billion is broken down into capital investment of $1.2 million which will be done in three phases over 36 months by these investors and $1.1 million is our projection of the operational cost over the 20-year period of the implementation of this project. But Chairman House Committee on Public Petition, Jerry Alagbaoso said that the ongoing modernization of custom has resulted in the collection of proper revenue due, elimination of corruption and other benefits.

 

The House notes that with these put in place, there exists a one-stop-shop which allows all trade transactions to be conducted through a single system domiciled with the customs He stated that NCS is already automated and does not need any fresh modernization process.

 

“For example, all other government agencies like NAFDAC, SON and the rest have dissolved into a single platform with the Nigeria Customs Service.”

 

Stakeholder fault re-award of contract

 

Maritime lawyer Emeka Akabogu faulted the award as lacking in legal backing and transparency.

 

He said: “When the Federal Executive Council of the country has given its seal to a project such as this, I would assume that it has been given a 360-degree consideration, particularly relating to viability and value for money. “There is no doubt that the country needs end-to-end customs modernisation, but it must be guided by the very reason for which it is needed, which is transparency and trade facilitation.

 

“Transparency will determine if the scope of the project justifies the investment. I certainly feel that the stated cost is not just high, it is mind-boggling. Automation will certainly involve new technology and innovation, but it is not rocket science. The project being contemplated will probably incorporate complete automation of data submission and verification processes for cargo clearance in a formalities single window.

 

“For increased assurance, it may be carried on block chain technology and even involve deployment of smart contracts. I absolutely subscribe to it as it will resolve the current issues which bedevil import clearance efficiency, including extortion by customs and under-declaration by importers.

 

But it will not cost $3.1bn and does not need a 20-year concession.” He noted that the more important element, which no reference was made to, is ensuring that the legal framework to drive the initiative is in place.

 

“Even though Nigeria is signatory to the Trade Facilitation Agreement, it is not implementing most of its highlight provisions which could greatly alleviate the challenges in the immediate term and which don’t need expenditure of ridiculous sums to achieve.

 

“One of the reasons is that the TFA provisions have not been given legal recognition in the CEMA. A draft of a new CEMA incorporating provision to facilitate compliance with the TFA was developed some years ago, but was not conclusively taken through to enactment.

 

“Any investment in customs modernisation without starting from the legal framework and policy quick-wins will be cosmetic and self-defeating. I advise we start from that point and from there define the technology requirements to facilitate compliance which will be the basis for a procurement such as has been done. We have put the cart before the horse,” he added.

 

Last line

 

Most industry stakeholders told Sunday Telegraph that while they are sure that the target of government official is to corner the one per cent Comprehensive Import Supervision Scheme (CISS) fund domiciled at the Central Bank of Nigeria, they said that the Federal Government is not deceiving Nigerians by saying that the new concessionaires they are handing over Nigeria Customs are going to invest $3.1 billion but will take anything in return.

 

They said that Nigeria would not only that huge amount to the foreign companies and local allies, the country would have given up some of its sovereignty to the foreigners including national security.

 

They stated that the existing contract with Messrs Adani Mega Systems Limited/ Webb Fontaine in terms of cost and scope of work; even as it has already achieved the desired result of modernizing the operations of Nigeria Customs Service. They much dreaded takeover of parts of Nigeria is being accomplished through the handover of Nigerian Customs Service to the Chinese IT firm Huawei

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