Project has potential to yield up to $176 bn — Finance Minister

Says PPP Concession to last 20-yrs

By Johnbosco Agbakwuru – Abuja

The Federal Executive Council, FEC, on Wednesday ratified the $3.1 billion anticipatory approval by President Muhammadu Buhari for the modernization of the Nigerian Customs Service, NCS,

The modernization project which is a Public, Private Partnership, PPP, concession expected to last for 20-years, was awarded to Messers E. Customs HC Project Limited as a concessionaire.

This was disclosed by the Minister of Finance, Budget, and National Planning, Mrs Zainab Ahmed, while briefing State House correspondents at the end of the virtual FEC meeting presided over by President Muhammadu Buhari at the Council Chamber, Presidential Villa, Abuja.

She explained that the project will not cost the federal government anything like the $3.1 billion being proposed will be sourced by the sponsors and their partners.

She said, “The minister of Finance, Budget, and National Planning presented a memo, which is for the ratification of Mr. President’s anticipatory approval for the contract for The Customs modernization.

“The purpose of the memo we presented to Council was for a project that will enable the complete automation of the Nigerian Custom Service processes and procedures using the application and information and technology in all aspects of Customs administration, in favour of a firm known as E. Customs HC  Projects Nigeria Limited For a concessionary period of 20 years.

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“The main objective of this project is to completely automate every aspect of the customs business and to institutionalize the use of smart and emerging technologies that will enhance the statutory function of the Nigerian Customs Service in the areas of revenue generation as well as trade facilitation and enhancement of security.

“The total cost of the project is in the sum of $3.1 billion.

“The consortium, the PPP group that has been approved are led by Messers Y Technologies with four other members.

“The committee that led this process also looked at the National Trade Impact process that has been going on for years and confirmed that the Nigerian e-customs project is a subset of the National Trade Impact and would prefer the Nigerian Customs to play it’s led the role in the national trading platform.

“The Bionica Technologies West Africa Limited, Bargain Securities and Supplies Nigeria Limited, these 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 (Wednesday), 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 there will look over the investment in the concessionary period of 20 years.”

The Minister of Information and Culture, Alhaji Lai Mohammed in his explanation said, “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.”

Giving more information on the project, Mrs. Ahmed said, “The Nigerian Customs currently has some level of automation services but it’s not all of its serves that are automated. This is an end to end automation of all of Nigeria’s Customs Service processes and it’s going to bring huge value to 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 the project.

“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 overtime according to the schedule that is negotiated for their investments including their profits and cost.

“So this is the best possible way for Nigeria to roll out an important capital projects using funds from the private sector and providing service for the use of Nigerian people and the government.”

Asked if the project Customs would overtake petroleum as a source of revenue for the country, the Minister said it was part of the diversification plan of government.

According to her,” We hope that at some point those revenues from oil will begin to be insignificant compared to revenue from the non-oil sector in the Nigerian economy. That’s our aspiration and that is the true meaning of diversification.”

The e-Customs Project is expected to improve Customs’ clearance efficiency to facilitate trade, support end-user satisfaction, and foster mutually beneficial relationships between consumers and the NCS, as required to improve the confidence of all stakeholders in the NCS.

It will minimize government spending and allocation to the NCS for tasks already contemplated such as digitization of Customs processes, integration of ICT, and intelligence facilities, among others.

This in turn would minimize government borrowing and spending whilst diverting funds that could have been used to facilitate this project to address other pressing needs of the government.

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Above all, it will eradicate tax and duties’ evasion towards increasing revenue generation with the introduction and interplay of the Unified Customs Management System, e-Port, Logistic Monitoring, electronic-Cargo Tracking, and Mobile Enforcement Systems, which all imports and exports would go through.

It was gathered that the strategic plan for the e-Customs Project began in 2016 when 94 companies responded to a bid request by the Nigeria Customs Service, NCS.

Fifteen 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 rigourous evaluation process. Bionica presented its bid together with a consortium namely, Huawei, Smiths Detection, Nuctech of China, Larsen & Toubro Group, and Paramount 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 the establishment of a digital/paperless customs administration (the “e-Customs Project”).

Vanguard