Next month, the Nigerian government will be sued in London over actions taken by the Nigeria Customs Service (NCS) to award the concession agreement to a company formed late last year in defiance of the federal government’s approval for the engagement of a consortium led by Bionica West Africa Limited. Huawei Technologies is one of the Special Purpose Vehicle (SPV) partners in the contested $304 million e-Customs project.
Since the acquisition was approved, the management of NCS has been in litigation with the primary sponsor over its demands for a new ownership structure and control over the SPV.
The project, initiated by Bionica West Africa Limited in 2018, with Bergman Security Consultant and Supplies Limited (representing the NCS), Huawei, and African Finance Cooperation (AFC) as partners, was approved by the federal government on September 17, 2019. This followed a memo sent to the Federal Executive Council (FEC) by the Minister of Finance, Budget and National Planning.
Acting on the memo by the Minister of Finance, Budget and National Planning to FEC for approval, President Muhammadu Buhari had vide letter SH/COS/08/10/4/225 of 17th September, 2019, granted anticipatory approval for the engagement of the Consortium Bionica Technologies West Africa Limited (Lead sponsor), Bergman Security Consultant and Supplies Limited (Co-sponsor), Africa Finance Corporation (lead financier), and Huawei (lead technical service provider), to establish a project SPV to enter a 20-year concession arrangement with NCS and ICRC for the Customs Modernisation Project (Establishment of digital/paperless Customs Administration).
But, the primary sponsor and NCS management have been at odds.
It was discovered that NCS reportedly fabricated paperwork in order to remove Bionica, the project’s primary sponsor, and give them to a business that was purportedly founded late last year by a supporter of the Customs Comptroller General, Col. Hammed Ali (rtd.).
The Comptroller-General of Customs claimed in a letter dated May 23, 2022, which was received by the president’s office on May 24, 2022, that Bionica Technologies West Africa Limited, one of the co-sponsors, had rejected the approved concession agreement by the AGF as instructed by FEC after it had undergone final review and approval by the Attorney General of the Federation (AGF) for execution by parties. He further said Bionica rejected and refused to execute the concession agreement extensively reviewed by all stakeholders and approved by the AGF.
Ali also alleged that Bergman Security Consultant and Supplies Limited and other parties had indicated their readiness to execute the concession agreement and that the technical partners (Huawei) and the lead financier AFC had confirmed their willingness to perform their roles in the Implementation of the project.
He concluded in the letter to Buhari, “In the light of the foregoing, Your Excellency is kindly invited to graciously approve that the NCS and ICRC proceed with the implementation of the customs modernisation project with Bergman Security Consultant and Supplies Limited as project sponsor, AFC lead financier and Huawei lead technical service provider under the SPV designated as Trade Modernisation Project Limited with the exclusion of Bionica Technologies West Africa Limited.”
However, documents seen by THISDAY showed that Bionica initiated the project six years ago and had put partners together, spending N5.7 billion in the process.
The NCS had in another letter to the president dated May 4, 2018, with reference number NCS. ADMMGTO18/S 15/C/ Vol VI, proposed to partner with Huawei Consortium, comprising Bionica Technologies West Africa Limited (lead promoter}, Bergman Security Consultant and Supplies Limited (co-promoter), African Finance Corporation (AFC Lead financier), Huawei Nigeria Limited as the Technical Partners with other Original Equipment Manufacturers (OEMs).
This was to be done under a PPP Concession arrangement to develop, design, implement and maintain the required e-Customs End-to-End ICT platform to digitalise Customs Business Processes and Procedures, upgrade Customs ICT infrastructure to world-class, and address NCS critical operational challenges and loopholes, management, regulation, control supervision and prevention of smuggling of goods across the country’s borders, and also effectively tackle the current national security challenges of terrorism.
Based on this, Bionica sought and got approvals from PenCom, the Infrastructure Concession Regulatory Commission (ICRC), and related government agencies and had proceeded to secure the federal government’s approval for the take-off of the project.
But, things changed when Customs attempted to remove Bionica as the primary sponsor against a federal government decision.
The federal government and the Attorney General of the Federation (AGF) were named as respondents in a lawsuit brought by Bionica. The company pleaded with the court to step in and intervene in the case because the e-Customs project, which is supposed to automate and digitalize all NCS business processes and procedures and create a digital, paperless Nigeria Customs organization, is in jeopardy.
The NCS surreptitiously moved to get the concession deal signed with a business that was established last year despite the lawsuit still being heard in court.
Meanwhile, Bionica’s lawyers in a letter to the AGF dated October 21, 2022, requested for the intervention of the AGF on the lingering issues on the execution of FEC-approved concession agreement, which had delayed the progress of the e-Customs project.
Bionica’s lawyers stated, “Surprisingly, we received a letter from the office of the AGF of the Federation dated 17th of January, 2023, but received 19th January, 2023 directing and informing that due to the pendency of the matter in Court in suit No: FHC/ABJ/CS/848/2022 between E-customs HC projects Limited & Anor -V- Federal Government of Nigeria &ORS we should wait for the decision of the court before any possible step can be taken.”
the total cost of implementing the project was approximately $1.896 billion, made up of Capital Expenditure (CAPEX) and Operating Expenditure (OpEX).
It was discovered that the e-Customs project will be executed in three phases over the course of the 20-year concession term, with phase one’s investment costing around $304 million in CAPEX, phase two’s costing $465.382 million, and phase three’s costing $435.8 million.
While the Direct Costs for OPEX for the duration of the concession are estimated at $1.896 billion, they include all fixed and variable costs, expenses, and charges directly and completely attributable to the day-to-day operations of the e-Customs platform. The CAPEX covers each deployment phase covering Hardware, Applications, Equipment, Application Implementation Service, ICT infrastructure Service, Marine Deployment, and the SPV costs.
The project was to be financed through contributions from promoters’ investments and vendor finance. The proposed financing plan for the project showed that it would be financed with an initial investment of $304 million from the project sponsors, vendor finance and debt finance in phase 1.
Sources with knowledge of the deal stated that the full development and implementation of the e-customs project would generate a total revenue of $176.2 billion over the concession period and would adopt a staggered revenue sharing formula between the concessionaire and the federal government of Nigeria.
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