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FG audits performance of Service Providers regularly – Cotecna boss

Managing Director of Cotecna Destination Inspection Nigeria Limited (CDINL), Tayo Rabiu, spoke with Vanguard’s Maritime Correspondent, Godfrey Bivbere on various issues relating to the operations of the Service Providers in general and Cotecna in particular.

Tayo Rabiu

Some of the issues addressed include, the nature of the scanners at the ports, why over 70% of containers still undergo 100% examination, why RAR issued by Service Providers are rejected by Customs and much more.
The two fixed scanners at the port are supposed to be ready and operational by now. What is delaying their completion?

Thank you so much, I make bold to say that the fixed scanners are ready, we started with the Apapa fixed scanner. You are aware we did the first scan in February, 2010 and following the inspection conducted by the Nigerian Nuclear Regulatory Authority (NNRA), we started actual scanning in April  2010 in Apapa and  it has been operational since then.

As for the Ashaye (Tin-Can) fixed scanner, in line with our contract is supposed to have been ready 18 months after we concluded the construction of the Apapa fixed scanner but then because of the initial delay of land acquisition at the port which is well known, the ports were concessioned by government after the signing of the Destination Inspection agreement.

So we had the initial delay of release of land in Apapa because it was no longer under the control of the Nigerian Ports Authority (NPA). So, what we did during the construction was a simultaneous construction of Apapa and Tin-Can Island ports but of course, we laid more emphasis on Apapa because that is the fixed scanner that was to be delivered.

Barring the fire incident that we had at the site last year, we had planned to deliver Ashaye by June of last year but interestingly, we did a test scan, it was delivered.
We changed all the equipment and all the parts that got burnt. So, in December  2010, we did the first scan.

As I speak, Ashaye fixed scanner is ready. NRA came to the site in January for  the initial go ahead for operation but we needed an operational plan for us to take the lead. NRA  came for the second inspection of the site after we did  the test-scan, but normally, they would set the on-site assessment test as stated by the manufacturers of the equipment.

Normally, when you bring a scanner, whether it is mobile or fixed, it is supposed to be in a certain form. When you install it on site, there is an on-site assessment test that must be done for all the major parts and major areas, to check if  what was sent  has been installed and subsequently certified okay. In essence, NRA  reviews that and also checks  radiation at all points so that it meets the risk standard test in Nigeria.

That test has been done now, and  that gives us the go ahead. They have given us the formal go ahead to start using the site and  as it is, the site is ready.

As a government agency, we have to wait for the formal operational license or formal commissioning. If they do not commission, we cannot use it for the purpose of scanning. One other thing I will like to say is that this is one scanner that is the first of its kind in sub-Sahara Africa. Nigeria has the pride of place of having two most modern scanners which has nine Million Electric Volt (MEV) and dual view.

When I say dual view, it means that it can look at the content of a container from the top and the side. It is more powerful with its penetration which is much higher than that of a mobile scanner and other options are also being installed. There are options in the sense that we have now installed what is known as the material discrimination which means that the scanner can differentiate between an organic and inorganic material.

Why is the Risk Assessment Reports (RAR) sent by Service Providers are sometimes rejected by Customs?
When we talk about risk management, we have the risk level that is recommended by either Cotecna or any of the service providers and then we have what we call the connectivity model of Automated System of Customs Data (ASYCUDA).

Now, it is not about what we have, there are parameters that are set in the ASYCUDA that makes the risk management scan to adhere to what we recommend and that is why sometimes when we recommend certain risk level, when the connectivity of ASYCUDA comes in, it does not always tally with that and what we have had is practically between us, Customs and Web Fountain, who are currently in charge of and working on the ASYCUDA with Customs to align the parameters so that you have more variable system.

The issue is that it profile importers,  import profile from different countries. All that we need is the recommendation of importers and imports and having a situation whereby you align most of the parameters of other agencies of government into the ASYCUDA connectivity.

National Agency for Food, Drug Administration and Control (NAFDAC), may want some items scanned. We have provided for other agencies of government. For instance, even food items can be scanned, that is why you cannot use  the scanner. According to the World Health Organisation (WHO), the scanner that is not more than 10 Million Electric Volts cannot be used for scanning of edible cargo.

That is why you cannot have a scanner that is more than 10 MEV which is the measurement of what is emitted into the atmosphere, if it is above 10MEV, it can cause harm in the food item that may be injurious to health. That is why sometimes, some government agencies will say “Oh no, we cannot scan food items but we have provided some government agencies with some latest information and they have discussed at the WHO level.

When you talk about the Risk Assessment Report (RAR), there are so many elements in the RAR. Apart from the risk channel of the RAR that is recommended by the service providers which is not known to the importer because it is not reflected in their own copy, there is another one sent to the Customs. You have the classification of the goods, that is on the RAR. You have value that is also there.

When you talk about value, at times Customs seems to issue Debit Note (D/N) on value recommended by the service providers in their RAR..

Well, we do not carry out physical examination. Sometimes we have even issued intelligence, sort of. We issue our RAR but then they could have other reasons to suspect that there is under declaration and because we have not carried out the physical examination, we cannot be too sure.

Therefore if somebody says he is bringing in, let us say 20,000 items in a container and we have reasons to believe that it is not true but all the documents say it is the same number, we will include an intelligence report to Customs. So if you have a situation where an importer has a RAR declaring a certain amount and we have updated based price per unit but we do not have evidence to prove that the total quantity declared is still not correct, we will put an intelligence for Customs.

Let us come back to the scanners. At the initial stage, there were complaints that the scanners were slow and therefore containers stay a long time at the scanning site, now that you have new scanners, the complaint is still there. Why is this so and how long does it take to scan a container?

It takes about three minutes on the average to scan a container and once we finish scanning, it is moved to Customs for processing and releasing. There are still some other things they do, they check to make sure that the declaration is correct. In the past, these are things that were done at the Customs Processing Unit (CPC) .

The agent still has to go to the terminal operator because even after Customs releases the containers, it is not the final one, once Customs releases, you are supposed to leave. Now they only release to the terminal operator to say that “we are satisfied with the duties that have  been paid, the container can now exit.” You then have to go exit the container from the terminal operator.

While all these are going on, the container still sits at the scanning site, you cannot leave. Now, before the construction work going on in Apapa, such containers could park anywhere after scanning within the terminal but as APM Terminal continues in their development of their site, it is becoming difficult for containers to park just anywhere but the scanning site.

You discover that most of these containers sit at the scanning site and until those ones are released, you cannot scan another. The scanners are there, our people are waiting, but they cannot do more because of space. In Apapa for instance, the capacity utilisation of the scanners is about 20 per cent. So you have about 80 per cent wasted capacity. Now how do we address this in a holistic manner?.

We will never have a situation where there will be unlimited space for containers to park after scanning, then what we also observed is that these truck drivers do not want to leave the port because the Lagos State Government has barred trucks from moving on some routes between 8 am and 6 pm. Since they do not have anywhere to park and if they park in unauthorised places, their trucks will be towed, they remain at the scanning site. As from 6 pm, if you go to the port, you will see that everyone wants to come out because now they can move on the road.

You discover that the volume that we are scanning is now determined by the space that is available. So what is the eventual solution to this because we cannot continue in this situation where the capacity utilisation is 20 per cent. We try to increase the capacity by telling the agents, to get the truck drivers to bring their trucks at night and we will capture all the images.

So if you get to the scanning site say by 8 in the morning, you will discover that everywhere is filled up with trucks and the level of what we are able to scan is dependent on where they can park.

In the past, we recommended to government a situation where you can move some things by rail or whether there is the possibility of storing containers in some terminals that have space but these are long- term solutions.

Now, the solution we are looking at is quick time. We talk about risk harmonisation, it is not just about Customs. Customs can release but you and I know that in reality, as a port user, when Customs releases, you cannot exit until the other agencies of government are involved.

What kind of approval are you talking about?

You know, before you apply anything in your risk management data, Customs must approve them for use because it is detached from the normal risk management system here, it’s not really management reason to say that you are feeding in people who have been profiled by Customs in your risk management system and you are allowing them because there is the issue of integrity there.

So, once this has been approved, we are having meetings and I could still go to Abuja this week on the basis of that. That is what we are looking for. The whole idea of the risk management system is to first ensure that you not only facilitate trade but that government does not lose revenue.

There must be feedback into the system, even when some government agencies have introduced some parameters or risk parameters that they suspect some things, the result of that should come back into the system so that it can update. It is a self learning system, you must continuously ensure that leakages are blocked and people who are compliant are rewarded so the whole idea is that once you have that and there is convergence in terms of the risk recommendation and what is accepted in the ASYCUDA selectivity engine.

We can do what is called pre-scanning which actually worked but a situation where we have recommended 40 per cent for scanning and the terminal operator has positioned this because the way the system works is that we are able to scan more then75 per cent of consignments from our system. In fact, at the last time, it was 78 – 80 per cent with the Risk Assessment Report (RAR) already issued before the consignment landed.

Are you saying more than 70 per cent of the consignments can be scanned?

Before, more than 75 per cent of consignments land at our ports, as I said it’s now between 78 – 80 per cent, has RAR already issued before the consignment arrival in Nigeria. The way it works is that once they accept your Form “M” as an importer, you are supposed to tell your exporter or the exporting bank to send the final shipping document to the local branch here and most of the time you know the documents will arrive before the ship actually lands.

So we would have issued the RAR. In more than 75 per cent of the time, these RAR are already available and it means that you are able to advise before the containers land, before the ship bearing them arrives. We are able to pre-advise the terminal operators that these consignments are meant for scanning. That is the way pre-scanning works.

They will tell us these are the ships that they are expecting and we will tell them, okay, based on the documents that we have, all those ones that we have issued the RAR are the ones that are meant for scanning.

In your opinion, do you think the Destination Inspection agreement between the Federal Government and the Service Providers have benefitted both parties on the one hand, and agents and the Customs on the other?

Definitely. When you go into a project as a private company, you also expect that you will benefit from it.

We have benefitted in terms of revenue to our company and we have also benefitted in terms of the experience in working in a project of this nature. We have a lot of return on experience that we can also showcase in other places.

When we started it, we were learning from Ghana. When the former President (Chief Obasanjo) wanted to approve the introduction of the scheme, he wanted to know where the scheme had worked in the West African sub-region. People used to go to Accra. Now, people come from Accra to learn from what we have in Nigeria because we have moved from where we were, we have moved to a higher level and then you have to understand that the economy power house of West Africa is Nigeria. If you can run it in Nigeria, then the same system can run in most places.

You are the first Nigerian Managing Director of Cotecna, what has been the challenge of working in the Nigerian environment and what has been the major challenge that the company had to face in the course of executing the D/I scheme in Nigeria?

Well, I will say that the first challenge was making sure that my company did not regret making a Nigerian the Managing Director because there is this belief that once you put a Nigerian in some place of position, something negative happens. I can tell you today because of the positive result that we have witnessed, this has been replicated in some other places. My first Deputy Managing Director (DMD) moved on to Ghana to become the Managing Director. My second DMD moved on to Kenya to become Managing Director in his own country too.

The other thing is that sitting where I sit, what I usually tell people is that it has also been beneficial to the country not only that a Nigerian is leading the team as at today, I think we have just about five expatriates and two non-West Africans and if you look at the staff strength of about 365, the country has also benefitted.

Talking about the Nigerian environment, it is what we all face. We all face it together. We were supposed to have, as specifically stated in our contract, maybe two generators at the site to serve as back-up but at present, we have 28 generators operating in the company. Power is a big issue. We run on generator 24/7. None of the sites is connected, even the headquarters that is located in the central business district in Lagos, we run on generators.

When you talk of the challenges, it is the challenge that is faced by every company in Nigeria. Being indigenous gives us  understanding of the environment and how to move on. Sometimes we have issues, the particular issue we had was the quick successions in the leadership of Customs. After discussing projects and agreeing on ways to move on and there is a change, you know the top echelon will change and you will have to start from the very beginning.  Every time, we continue to sell a project that had been sold and awarded in 2005.

Government is right now  engaging private audit companies to examine us and that is why Cotecna at the end of 2012 can put its CV on the shelve and say in Nigeria, we signed a contract to deliver this and we did justice to it.


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