FG risks $2.5billion litigation fee on Customs modernisation project

While the approved $3.1 billion Customs modernization project by the Federal Executive Council (FEC) is expected to yield up to $176 billion at no cost to government, there is a new twist as Federal Government risks paying $2.5 billion as litigation should the contract be implemented.

It was learnt that the litigation fee would be paid, should the project be implemented by Bionica Technologies West Africa Limited (sponsor), Africa Finance Corporation (lead financier), Bergmans Security Consultants and Supplies Limited (co-sponsor) and Huawei (lead technical service provider).

A report by the House of Representatives Joint Committee on Finance, Customs and Excise and Public Petitions on need to investigate the proposed concession and unveil the foreign and local interested parties revealed that the government had breached the terms of an earlier contract with Messrs Adani Mega Systems Limited/ Webb Fountain consortium.

The Committee’s report was jointly signed by the Chairman of Finance, James Abiodun Faleke; Chairman Public Petitions, Jerry Aguigbo; Chairman Customs, Yuguda Hassan Kila; Clerk to Committee on Finance, Lawali Ibrahim, and Clerk to Committee on Customs, Aliyu Maccido.

The committee stated that, having been mandated to investigate the case, it resorted to some approaches, one of which included an interactive session with the consortium and Adani System Limited, which was conveyed on November 6, 2019 to further unravel the context and concept of the proposed concession arrangement as well as examine the competence and financial prowess of the companies that bidded for the contract.

The report also revealed that the Presidency, through the office of the Chief of Staff to the President, issued a letter dated September 17, 2019, titled “Presidential Initiative on Customs Modernisation to carry out the same project awarded to Messrs Adani Mega Systems Limited/ Webb Fountain Limited seven months after they were engaged by Central Bank of Nigeria – Comprehensive Imports Supervision Scheme (CBN- CISS).

Meanwhile, findings from the report revealed that the CBN-TC on CISS on behalf of the Federal Government had engaged and signed contract with Messrs Adani Mega Systems Limited/ Webb Fountain Limited on a “Build, Operate and Own” agreement, in which section 42 (1a) of the Procurement Act 2007 by the Bureau for Public Procurement on April 11, 2017 granted certificate of no objection to the CBN recommending the consortium for award of the project.

The committee said it was in possession of documents presented by Messrs Adani Mega Systems Limited/ Webb Fountain Limited to buttress its stand on existence of a contract agreement entered between the CBN-TC on CISS, noting that the proposed concession period was expected to last 20 years on pro-rata sharing of one percent (CISS and NESS) on phase one of the $300 million investment.

Although, the report 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 also pointed out that the consortium earlier given the job had instituted the ongoing litigation in a suit challenging the cancellation.

According to the committee’s report, 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.

Meanwhile, the Solicitor General of the Federation had advised the Minister of Finance, Zainab Ahmed to consider the strength, weakness and the litigation fees of $2.5billion and lengthy time frame of embarking on the case and how that might affect the goal of government for revenue generation.

The committee further said: “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 Fountain.”

The committee, however urged the government to allow Messrs Adani Mega Systems Limited/ Webb Fountain continue with the project to avoid possible revenue loss, while urging the National Assembly to ensure compliance with the committee’s decision.