E-Customs And Concession Brouhaha

By Kenneth Jukpor & Yusuf Odejobi

Six months after the Federal Executive Council (FEC) approved the sum of $3.1 billion for Customs Modernization under Public-Private Partnership (PPP) concession to Messers E. Customs HC Project Limited, port stakeholders remain oblivious of the arrangement.

The concession for a 20-year period to deliver the customs modernisation project was said to be targeting full automation of the operations of the Nigeria Customs Service (NCS) and it has been applauded as a potential game-changer in cargo clearance at the nation’s ports.

Nevertheless, there remain several unanswered questions as FEC also approved the contract sum of  $18.12 million and N3.255 million for the acquisition of three (3) Rapiscan Cargo Mobile Scanners awarded to Messrs  Airwave Limited and another contract of  N280,992,888:75 inclusive of VAT for 5 units of fast Ballistic Reverie Assault Boats/ 5 units of Patrol Boats with assorted accessories  awarded to Messrs C.Y. West Africa Limited.

While the Finance Ministry hasn’t established the link between the contract award sum of $18.12 million and N3.255 million to Messrs Airwave Ltd for the acquisition of Rapiscan Cargo Mobile Scanners and the concession contract award sum of $3.1billion to Messrs E-Customs HC Project Limited; recent statements by top Customs officials have further complicated the Modernization project.

During a training workshop organized by the NCS for journalists in Lagos, Comptroller, Modernization and Risk Management of the ICT Unit, Customs Headquarters, Comptroller Kunle Oleyede said the E-Customs also known as Customs Modernization isn’t a concession

Speaking on the topic “E- Customs, the Future of Trade Facilitation”, Oleyede said the e-Customs arrangement from end to end will be operated and managed by Customs officers.

“It will take the Service 20 years to put all the needed components of the Customs modernization together for proper operations, which will include risk management, deployment of drones, marine surveillance and geo- intelligence among other technological driven mechanisms.”

“Please go and educate the public that E-Customs is for Nigerians, managed by Nigerians and not foreign companies. E- Customs is a global thing that helps us to speak the same language and other Countries have already key into it,” the Customs boss said.

Recall that the Minister of Finance, Budget and National Planning, Zainab Ahmed, described the initiative as a PPP concession with the main objective to completely automate every aspect of the customs business and institutionalize the use of smart and emerging technologies to enhance the statutory function of the NCS in the area of revenue generation.

“FEC ratified Mr. President’s approval for the PPP concession for a 20-year period to Messers E-Customs HC Project Limited as a concessionaire for the delivery of customs modernization project. This is a project that will not have an immediate cost to the government, the investors are providing all of the financings and this revenue will be deployed in three phases and they will look over the investment in the concessionary period of 20 years. The 3.1 billion dollars being proposed will be sourced by the sponsors and the partners,’’ the Minister explained.

While Customs argues that e-Customs is entirely its project, the Ministry of Finance says it is a concession.

According to Investopedia, a concession agreement is a contract that gives a company the right to operate a specific business within a government’s jurisdiction or on another firm’s property, subject to particular terms. This means that the agreement grants the concessionaire exclusive rights to operate their business in the facility for a stated time and under specified conditions.

This contracts Customs claim to be completely in-charge and following the argument by Customs that the Modernization Project isn’t a concession, the President of Africa Association of Professional Freight Forwarders and Logistics of Nigeria (APFFLON), Mr. Frank Ogunojemite has charged the Finance Ministry and Customs to provide clarity on the arrangement.

“What the Customs is saying is contrary to what the Minister said. They should provide clarity so that the general public can know where the country is headed. As it stands even the top Customs officers don’t seem to understand what Customs Modernization is about.”

“In my opinion, Customs is incapacitated and simply dancing to the Federal Government’s tune without clear understanding of what this development is about. Nigerians, especially port users should be abreast with this development. Customs should seek clarity and better inform the public especially the freight agents that are their partners,” Ogunojemite said.

Speaking on these complexities, the NCS Public Relations officer, Deputy Comptroller Joseph Attah said the e-Customs was a customs project in line with the World Customs Organisation (WCO) framework to modernize its operations and not a concessionary project.

His words : “We have gotten approval for the e-customs and we are swinging into action. Of course, you know the whole component of the e- customs revolves around full automation and processes which will include installation of scanners, e-port, logistics monitoring, cargo tracking, e-enforcement system etc.”

“It is a complete automation of every aspect of customs operations institutionalizing the use of smart and emerging technologies in such a way that NCS administration operates within the confines of global best practices”.

Attah, however, said the consortium would handle the scanners and other facilities needed for the smooth operation of the project.

However, another ambiguity stemming from Attah’s position that the Concessionaire would operate scanners is the possibility that cargo scanning would attract new charges by the concessionaire. Industry observers also wonder how the private company would be able to recoup its $3.1billion without a stake in the process.

Recall that a veteran freight forwarder and former President of the Association of Nigerian Licensed Customs Agents (ANLCA) Prince Olayiwola Shittu in a chat with MMS Plus decried the level of secrecy surrounding the Customs concession project.

His words: “I’m not comfortable when there are government policies shrouded in secrecy. This decision by the government is one that affects freight forwarders, so why are we in the dark? It could be because we have the benefit of history and the government doesn’t want history to come up.”

Noting that similar approaches had been introduced by the Federal Government in the past, he said: “At one time, there was Crown Agent; but freight forwarders came together and fought against it. There was a time we were doing pre-shipment inspections and Customs still carried out their functions. We considered this to be duplication of functions. Remember PIDA, which was a similar venture but you can’t take away the role of Customs. Customs play a vital role everywhere in the world. They are responsible for trade facilitation and security.”

“If the modernization would be the system in America, there would be no need for human interface; it could work perfectly. The Customs Modernization project would outsource revenue collection to the concessionaires. Is Nigeria ready for this? Would we have a system where people collect monies on behalf of the country and abscond with it? We expected that there would have been several meetings and sufficient consultations before this approval.”

On his part, a former President of the National Association of Government Approved Freight Forwarders (NAGAFF), Chief Eugene Nweke admonished the Finance Ministry to make public the agreement entered with the concessionaire for Customs Modernization.

Chronicling some of the e-Customs projects and the flaws since the 1970s, Nweke said “Pre-Shipment Inspection Scheme introduced in 1979, later was backed up by legal agreement via Pre-Shipment Inspection Act of 1996 aka Decree No.11 of 1996. – Pre-Shipment Inspection Companies were paid a whooping sum of $70 million to $75 million yearly for escalating trade malpractices, while the Service was partly paid less than N1 billion.”

“Within March to September 1999 Destination Inspection was re-introduced, under a contractual agreement with Destination Inspection Agents (DIAs), the essence was for a full computerization and interconnectivity of the ASYCUDA to all stakeholders.”

“On 3rd July, 1997, the Ministry of Finance signed an agreement with the Economic Community of West Africa States (ECOWAS) for the installation of Asycuda in Nigeria Customs Service Headquarters and Area Offices of Seaports, Airports & Border Stations. The objectives of this agreement are hinged on e-customs modernization. The Contractor/Consultant installed outdated 2.7 site instead of the 3.0 site paid for, hence the need for upgrade to Asycuda 3.0 site.”

“5 years after, the Asycuda agreement was not completed, out of the17 sites covered in the contract only 7 sites were installed, wherefore pursuance to the upgrading into Asycuda 3.0, UNCTAD estimated $2,950,000:00 for its components, and non UNCTAD components at $66,900:00. Note that the completion of phase 1 of the project is between 6 – 8 months at the cost of $27,805,000:00. Was there any sanction against ECOWAS?”

“In June, 2001, a Presidential Committee, chaired by Federal Ministry of Finance was set up to review the Pre-shipment Inspection (PSI) Scheme; the Committee examined the objectives and mode operations of the PSI.”

“In 2002, the Government further commissioned Messrs J.C.E. CONSULTING ASSOCIATE (CROWN AGENT) to undertake a study on the CISS and Nigeria Customs Service for the purpose of disengaging the services of Pre-shipment Inspection Agents and enhancing revenue.”

“In June, 2003, the Federal Government signed an agreement with Messrs COTECNA INSPECTION SA on the provision, installation and operation of 14 X-ray Scanners on Build, Operate & Transfer (BOT) basis, at prescribed locations to scan all imports coming through the approved imports entry points. The 10-year contract also included the yearly training of 50 Customs officers on the Computerized Risk Management System (CRMS), to train 500 officers within the contract period of ten years. Again, the implementation was marred with several flaws and compromises.”

Also speaking with our correspondent, the National Coordinator, Save Nigeria Freight Forwarders, Importers & Exporters Coalition, and Chairman International Freight Forwarders Association, Chief (Dr.) Chukwu Osita called on the Federal Government to be proactive with her dealings and also put the right pegs in the right hole.

His words: “Nigeria is not ready for automation. The port is running on generators 24/7 and you’re talking of automation. Go to other countries automation is working because they have stable power supply. Some ports even have dams where they generate their own power supply. It is not that we don’t know what to do in this country but we have to put the right people in the right place for things to work.”

While Customs has swiftly created a Modernization unit to deal with the new developments, the unanswered questions of several industry observers include; will there be an end to perennial Customs modernization attempts in Nigeria? How can the Finance Ministry reconcile the impact of financial losses amid the non performing contracts on this initiative?

Clarification on these issues will go a long way in setting the records straight and set the template for careful future administrative considerations, while the role of Customs and the concessionaire is yet to be outlined in the new arrangement.