Again, $3.1b e-Customs project suffers as court restrains FG

There is no respite yet over the controversies surrounding the approval of the $3.1 billion e-Customs concession project, as the Nigeria Customs Service (NCS) has allegedly signed a fresh agreement that excludes two of the parties in the original concession thereby overriding the Federal Executive Council (FEC).

This has elicited concerns from major stakeholders and further dragged the project into another round of controversy, which has become a case of litigation in the court of law.

Already, a Federal High Court in Abuja has restrained the Federal Government from enforcing or giving effect to an agreement on the Customs Modernisation Project.

Recall that FEC had in September 2020 approved the $3.1 billion e-customs contract, which is expected to completely automate every aspect of the customs business and to institutionalise the use of smart and emerging technologies that will enhance the statutory functions of the Nigerian Customs Service.

The Minister of Finance and Budget Planning, Zainab Ahmed, told journalists shortly after the FEC meeting in Abuja, that: “The Bionica Technologies West Africa Limited, Bargain Securities and Supplies Nigeria Limited, are lead sponsor and co-sponsor. We also have The Africa Finance Corporation (AFC) as the lead financier and Huawei Technology as a technical service provider.

“So, the council today 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 financing and this revenue will be deployed in three phases and they will look over the investment in the concessionary period of 20 years.

“The key point is that it is not costing the federal government one thing, the $3.1 billion being proposed will be sourced by the sponsors and the partners,” she said.

Ahmed added that: “This project has the potential to yield up to $176 billion of revenue for the project and the consortia that are providing this investment are going to be paid over time according to the schedule that is negotiated for their investments including their profits and cost.”

Having stalled for about two years, the Federal Government appeared to have made headway after the project was ratified and signed on May 30, 2022 in Abuja with Trade Modernization Project, Huawei Technologies Company and African Finance Corporation.

Few weeks after the signing of the deal, another round of controversy ensued which have again stalled the take-off of the project.

Consequently, a Federal High Court in Abuja on Friday restrained the Federal Government from enforcing or giving effect to an agreement on the project, which was allegedly executed by its agents on May 30, 2022.

The agents who allegedly executed the disputed concession agreement are the Nigeria Custom Service, Trade Modernization Project Limited, Huawei Technologies Company Nigeria Limited and African Finance Corporation.

The court also issued an order of interim injunction against the Federal Government or its agents acting through the Federal Executive Council from retrospectively ratifying the decision to concession the Customs Modernisation Project also known as e- custom project to Trade Modernization Project Limited, Huawei Technologies Company Limited and African Finance Corporation.

The restraining order issued by Justice Inyang Ekwo of the Abuja Division of the court shall last till the hearing and the determination of a suit brought against the Federal Government and other parties by two aggrieved companies.

The two aggrieved companies, E-customs HC Project Limited and Bionica Technologies (West Africa) Limited jointly challenged the alleged unlawful and fraudulent concession of the E-custom project to the defendants.

Counsel to the two aggrieved companies Anone Usman, had on behalf of the two plaintiffs argued an ex-parte application praying the Federal High Court for the interim orders against the defendants to protect the interest of his clients.

Justice Ekwo while ruling on the ex-parte application, granted the prayers of the plaintiff having placed sufficient evidence of interest in the concession project.

The judge also granted permission to the aggrieved companies to serve a writ of summons and all other filed processes on the African Finance Corporation at its head office, located in Ikoyi, Lagos through DHL courier services.

Defendants in the suit are the Federal Government of Nigeria; Attorney-General of the Federation; Minister of Finance, Budget and National Planning; the Infrastructure Regulatory Concession Commission; Nigeria Custom Service; Trade Modernization Project Limited; Huawei Technologies Limited; African Finance Corporation and Bergman Security Consultant and Supply Limited being 1st to 9th defendants respectively.

Justice Ekwo subsequently fixed June 28 for hearing in the matter.

The two plaintiffs had in their statement of claim narrated how they proposed to carry out custom modernization project through several government officials for the benefit of the Nigeria Customs Service.

They claimed that after series of meetings and negotiation with some of the defendants, President Muhammadu Buhari granted anticipated approval for the e- custom Project

They averred that on September 2, 2020, the Minister of Finance presented a memo number EC2020/153 to the Federal Executive Council, FEC, the highest decision making body of the Federal Government, and secured approval for the two plaintiffs to be granted the concession.

Plaintiffs further claimed that trouble started when the Nigeria Customs Service unilaterally reviewed the FEC approval and imposed other conditions among which are shareholding formula and governance structure.

They claimed that the power of the NCS to unilaterally review FEC approval was protested and that the Comptroller General of Customs stood his ground.

Plaintiff asserted that to their surprise they read in the news that the Nigeria Customs Service had executed a concession agreement with Trade Modernization Project on May 30, 2022, Huawei Technologies Company and African Finance Corporation in total breach of the Concession Agreement vetted by the AGF in conjunction with the Minister of Finance.

They averred that Trade Modernization Project was incorporated in April, 2022 at the Corporate Affairs Commission with one Alhaji Saleh Amodu, a close friend of the Comptroller General of Customs as the chairman.

Plaintiff asserted that the new company having been just incorporated in April 2022 could not have obtained and did not obtain the full business case compliance certificate from the Infrastructure Regulatory Concession Commission and the approval of the Federal Executive Council to carry out the e- custom project.

They therefore asked the court to make a declaration that the decisions of the Federal Government and its agents to enter into concession agreement with Trade Modernization Project, Huawei Technologies Company and African Finance Corporation in respect of the e-customs project is illegal, null and void, having been made in gross violation of Section 2 of the Infrastructure Concession Regulatory Commission Act 2005.

They also asked the court to declare that E-customs HC Project Limited is the approved and rightful concessionaire for the e-customs project as approved by   the Federal Executive Council at its meeting of September 2, 2020 and in line with Section 2 of the Infrastructure Concession Regulatory Act.

They also applied for an order of the court directing the Federal Government through the AGF, Finance Minister, ICRC and NCS to consummate the E- custom project with the 1st plaintiff as approved by FEC in September 2020.

Besides, the two plaintiffs ask the court to compel the defendants to pay them a sum of Two Hundred Million Naira as cost of litigation.

The strategic plan for the e-Customs project began in 2016 when 94 companies responded to a bid request by the Nigeria Customs Service. A total of 15 companies were pre-qualified and were all invited to make presentations on their solutions to enable Nigeria realise its vision of attaining complete automation of its customs operations and enthroning best practice methods as obtained in advanced countries.

Bionica Technologies W.A. Limited was the preferred bidder after a rigorous evaluation process. Bionica presented its bid together with a consortium namely, Huawei, Smiths Detection, Nuctech of China, Larsen & Toubro Group, and Paramout Group, Huawei Technology. The Africa Finance Corporation (AFC) is both an equity investor and the Mandated Lead Arranger (MLA), which will facilitate loan syndication with foreign and local banks.

To finance and implement the e-Customs Project, a Project Company was set up to partner with NCS under a PPP arrangement, to develop and implement Customs modernization through establishment of a digital/paperless customs administration (the “e-Customs Project”).

The e-Customs Project shall encompass among other things the deployment of e-Customs Production Applications. These Production Applications include e-Clearance, e-Port System, Risk Control Centre (RCC), Logistics Management System (LMS), Electric Cargo Tracking System (ECTS), Intelligent Gate (i -Gate) and Mobile Enforcement (ME).

A key feature of the e-Customs Project includes an integrated and robust infrastructure for Customs Supervision, which will ensure the stability and efficiency of Customs operations at its Headquarters and Branches. The infrastructure includes Cloud Data Centre, All Connected Customs Network, Video Surveillance System, among others.

Embedded in the e-Customs Project is the design and deployment of a digital/paperless NCS with the following advanced functionalities: Office Automation Application; Human Resources Management (HRM); Documents Management System (DMS); and Asset Management System (AMS). In addition, Advanced Non-Intrusive Inspection (NII) equipment will be deployed in all NCS operational locations with complete technical support and maintenance.

A seamless co-ordination of all NCS operations will be enabled through the development and deployment of e-Enforcement Platform with Unified Communications, Intelligence Video Surveillance (IVS) to facilitate mobile Customs operation.

The Project will introduce a robust Enterprise Network covering NCS sites (Headquarters, Zonal Headquarters, Area Commands and Border Stations) inclusive of a Centralized Data Center with Disaster Recovery that will enable the Service Interchange Intelligent Data with other departments, partner Government Agencies in the trade chain, and other Stakeholder Agencies such as the Standards Organisation of Nigeria, Central Bank of Nigeria, National Agency for Food and Drug Administration and Control, Federal Ministry of Finance and Federal Inland Revenue Service.

To ensure that there are no interruptions of the e-Customs Project, a critical part of the Project will include the deployment of Integrated Power Supply Solutions on all NCS sites. This will be enhanced through the development and deployment of Cyber Security Networks for all NCS Data Centers, as well as a Monitoring and Communications Systems, which will consist of Intelligent Video Surveillance and Unified Communications Systems.

Finally, the e-Customs Project will introduce advanced and faster X-ray scanners at the airports, seaports and land borders to assist NCS improve clearance efficiency in order to meet trade facilitation needs.