Nigeria – Huawei, Smiths Detection, Bionica win concession for $3.1bn Customs modernisation project

The Federal Executive Council (FEC) on Wednesday ratified the $3.1 billion anticipatory approval by President Muhammadu Buhari to concession the modernisation project of the Nigerian Customs Service (NCS) to a consortium named Messers E.Customs HC Project Limited. The concession is for 20 years.

The consortium is made up of Bionica Technologies W.A. Limited, Huawei, Smiths Detection, Nuctech of China, Larsen & Toubro Group, and Paramount Group.

The Minister of Finance, Budget, and National Planning, 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 on Wednesday, said the project will be at zero cost to the Federal Government since the $3.1 billion being proposed for the project will be sourced by the concessionaire.

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 modernisation.

“The purpose of the memo we presented to Council was for a project that will enable the complete automation of the Nigeria 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.

“The main objective of this project is to completely automate every aspect of the Customs business and to institutionalise the use of smart and emerging technologies that will enhance the statutory function of the Nigeria 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 Nigeria Customs to play its 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, 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 modernisation 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 in the concessionary period of 20 years.

“The Nigeria Customs currently has some level of automation services but it is not all of its serves that are automated. This is an end-to-end automation of all of Nigeria 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 billion which will be done in three phases over 36 months by these investors and $1.1 billion 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 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.

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

Asked if with 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 is our aspiration and that is the true meaning of diversification.”

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.”

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 Paramount Group. 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.

Source: Ships and Ports, September 2002

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