Stalled cargo scanners contract gets new opening
As FG makes fresh commitment, gloss over delays
BY EGUONO ODJEGBA
After the approval of two failed contract awards for the purchase of cargo scanners for use of the Nigeria Customs Service (NCS) by the present Federal Executive Council (FEC), the latter has again approved $18m, N3.25billion for the supply and installation of three units of Rapiscan mobile cargo scanners.
Mrs. Zainab Ahmed, the Minister of Finance, Budget and National Planning, who announced the deal at the end of the 9th virtual FEC meeting at the Council Chamber, Presidential Villa, Abuja, presided over by President Muhammadu Buhari, said the scanners are for use in three customs ports across the country, namely Onne, Port Harcourt and Tin Can Island Lagos ports.
It will be recalled that the former Minister of Finance, Mrs. Kemi Adeosun announced the award of contract for the purchase of three units of same Rapiscan mobile scanners, valued at over N9billion to one Messrs Air Wave Ltd. The contract award however was steeped in controversy after the management of the Nigeria Customs Service (NCS), allegedly in collusion with the contractor, toyed and tossed the approval around for about two years, after which the NCS wrote to the Bureau of Public Procurement (BPP), to seek review of the contract sum including the review of the originating tax and exchange rates.
Adeosun, under whose supervision the deal was packaged and approved by the FEC in 2018, said that the contract includes the training of 120 customs officers in the operation of the scanners, and the integration of the scanning system into Nigeria Integrated Customs Information System II, NICIS 11.
The former finance minister in addition said that the contract cost includes delivery of the three units’ scanners, on-site services/support and maintenance for 30 months from the date of installation and commencement of operations.
Earlier also, in Oct 2019, FEC announced the approval of the sum of N718.6 million for the acquisition of one mobile security scanner for the Lagos Port Complex, Apapa. Minister of Information and Culture, Alhaji Lai Mohammed who announced the contract award after the weekly FEC meeting presided over by Vice President Yemi Osinbajo, at the Presidential Villa, said the scanner would boost security at the port as well as attract more revenue.
Mohammed said, “The Ministry of Transportation presented a memo for approval for the award of contract for the supply of one mobile security scanner at the Lagos Port Complex. The contract is worth N718.6 million
Until yesterday the FEC officially announced the cancellation of the earlier award of contract for the supply and installation of three Raspian scanners, the mobile security scanner meant for Apapa the Lagos Port Complex was yet to be supplied.
Speaking on the latest development, Zainab Ahmed explained reasons the earliest contract was not executed, citing review of the contract contents based on the failure of those who packaged the deal to include VAT; even as she further cited disputes that arose from ‘exchange rate differential’.
Neither the finance minister nor Lai Mohammed told Nigerians the reasons for the said dispute in exchange rate differential, nor reasons the contract duly approved by FEC, following which the procurement processes were undertaken, finalized and approval granted by the Bureau of Public Procurement, using public funds.
Like the keeper of the pharaoh’s gold storehouse, Ahmed simply said, “Today at Council we presented two memos, the first memo was to seek Council’s approval for the revision of a contract that was previously approved by Council in 2018 for the supply and installation of three numbers Rapiscan mobile cargo scanner.
“This contract is awarded to a company that is named Messrs Airwave Limited and the contract is in the sum of $18.12 million of foreign component, there is also a local component of N3. 255 billion inclusive of five percent VAT.
Although she failed to dwell on the bulk contract sum differential, she explained that the review was done to accommodate VAT and address exchange rate disputed, without explaining why a fundamental element such as VAT was omitted, and or, why the contract was unexecuted under the prevailing time frame exchange rate, or why the procurement certificate duly granted was utilized two whole years after.
According to Ahmed, “The review became necessary in order to accommodate VAT which was not included in the initial contract and also due to dispute that we had arising from exchange rate differential. So we have now a resolution and an understanding and FEC approval for this contract to go on.”
“The scanners are designed to aid effective revenue collection, the features that will screen for narcotics, weapons and undeclared items; they can also detect arms and ammunition, legal importation and possession of arms and light weapons. The presence of these scanners will obviate the need for physical examination of goods and fast track the trade business report. This contract is for the Nigeria Customs Service.”
…Cargo scanners controversies since 2015
It is not news that the import inspection function of the Nigeria Customs Service, NCS, has for more than four years been stalled owing to the moribund state of its scanners, at the seaports and border stations.
Unhappily, this has given rise to 100percent physical examination of imports by the customs, amid concerns over integrity of the manual process and the security implication of the likely leakages of arms and ammunition, and other dangerous but controlled items such as chemicals and drugs.
Over and above all is the sad news of the award of approximately N9billion contract for the supply and installation of 3 Rapiscan Mobile Cargo Scanner-Eagle M60 awarded to Messrs Air Waves Ltd, since 2018. While the failure of the contractor to execute the contract raises a great deal of concern, the questionable role played by the Nigeria Customs Service, NCS, and the Bureau of Public Procurement, BPP, in respect of the belated review of a contract that may have been deliberately stalled, for whatever reasons, comes to the fore as officially and morally reprehensible.
One wonders what the relevant government agencies involved in the deal wish to accomplish by deliberately delaying a contract award that has passed all due process; and representing the contract for review after two years of non action, and without any query to those responsible for the delay.
More worrisome is the action of FEC, which discussed the matter without as much as asking reasons the contract has to delay, and promptly adopted the outcome of the review as though it was the most natural thing to do. Thus transparency, process integrity, ease of doing business, business ethics and contractual time frame, all thrown away through the window; in a manner that suggests that only President Muhammadu Buhari and his appointees and not the Nigerian people, matters.
Those at the receiving end of the scanners purchase endless project such as importers, freight forwarders and clearing agents, are left to bear the brunt of the shortfalls and high handedness arising from customs 100percent physical examination of goods.
Perhaps, FEC does not think that these people matter, nor the masses of Nigerians who also bears the inevitable high cost of goods, importers and their agents duly to pass on to them, based on additional costs lost to lack of scanners and associated expenditure.
The security implications for the avoidable delays in the scanner project are better imagined than said. To begin with, the concept and practice of 100perceent physical examination is fraught with inaccurate outcomes as concealments have found their way into the country, despite repeated assurances to close the gap; even as delays arising from physical examination of cargo have gradual but unavoidable effect on port congestion build up.
Port players say that meaningful and actual 100percent physical examination will impose immediate congestion since it is impossible to un-stuff and reload more than one 40ft container a whole day; and taking into account that improvised ‘sampling’ practice where items are randomly picked from containers by customs to safe time does not reflect the expected accuracy tied to 100percent examination against questionable imports; a challenge that can only be adequately and efficiently addressed by scanners.
Former Minister of Finance, Mrs. Kemi Adeosun, under whose supervision the deal was packaged and approved by the Federal Executive Council, FEC, announced the contract in 2018, informing that the contract includes the training of 120 customs officers in the scanners operation, and the integration of the scanning system into Nigeria Integrated Customs Information System II, NICIS 11.
The finance minister said that the contract cost includes delivery of the three units’ scanners, on-site services/support and maintenance for 30 months from the date of installation and commencement of operations.
The failed purchase has also left the leadership of the Nigeria Customs Service, NCS, with integrity question marks and moral bruises, for its inability as the primary beneficiary, to drive the process vide efficient intervention; any less misgivings by industry observers that the customs leadership may have fallen for the contractor’s alleged seeming gambit.
Even as the scale of suspicion of internal sabotage stretches endlessly, the failure of NCS to pull through with the 2018 approval granted it is helping to oil the speculation that either the customs leadership prefer that import inspection regime remain tied to manual physical examination with its widespread sharp practices, or that the customs leadership led by Col. Hameed Ali, retired, for whatever reasons, appear uninterested, as to whether the scanners work or not.
Industry observers say the CGC’s apparent indifference raises doubt about his understanding of customs operations and or, a precise understanding of his official mandate; arguing that his failure to drive the 2018 scanners approval or query those who may have caused the contract to fail, a reflection of his poor understanding of customs operation.
While BPP is believed to have issued the procurement processes in 2018 said to be tied to a portfolio of essential taxes and the prevailing exchange rate, findings indicate that the contractor, Messrs Air Wave Ltd and NCS failed to follow up, thereby missing out drawing the fund for the purchase the scanners from the 2018/2019 budget.
The immediate consequence of this apparent official negligence is that the service is still in the woods over its ability to determine offensive imports and to prevent leakages of dangerous items from getting into the country. While industry watchers have attributed the failed deal to lack of harmony and distrust between the major actors, some argue that cargo scanners have assumed a big deal attracting strange bed fellows with diverse interests.
Although Air Wave Ltd, a subsidiary of Bhojraj Chanrai Group, formerly Bhojsons & Company, is believed to have expertise and years of experience providing services in telecom and security solutions, and as authorised distributor of Rapiscan Systems in Nigeria, its inability to pull through with the supply contract award granted it since 2018 has put serious question mark on both its integrity and performance.
Stakeholders say it is of little avail that the firm was retained to supply the scanners, noting that other government agencies may be wary of its ability to deliver project based on contractual time frame.
By far confounding is reason the NCS has to approach BPP to seek review of some components of the contract agreement, after two years of inaction. Although the review pass, and the contract have been re-awarded back to Messrs Air Wave Limited, tongues are wagging that the firm couldn’t have influenced NCS to push the review for nothing. There is a perception of character flaw and status demeaning for an important agency of government under President Muhammadu Buhari to bend double backwards to serve the interest of contractors, in a government that lay claim to competence, efficiency and transparency.
Pinnacle Time newspaper also gathered on authority that although the BPP provided the NCS with a “No Objection Certificate” in 2018 for the purchase, but the Customs reportedly in collusion with the contractor failed to activate the contract, whilst the former sought for a roundabout way of inspecting imports manually.
Document sighted by our reporter revealed that the BPP in a letter dated May 8, 2018 with reference number BPP/RPT/ 17/ Vol.1/ 505 had issued the No Objection Certificate letter to customs for the procurement of scanners, but which the customs failed to utilise.
Whereas the minister of finance did not report the tax and exchange rate percentage approved for the project by FEC, checks revealed that in its review application, NCS presented a total contract sum of N9, 253,890,000, ironically at an exchange rate of N360 to a dollar.
Those whose business it is to know have expressed concerns that since the dollar currently exchange for N440 against the N305 exchange rate of 2018 when the contract was awarded, the contract is most likely going to run into fresh hitches and may take much longer time to realize if the recent approval falls below the prevailing rates. Pinnacle Time can report authoritatively that NCS in its contract review, sought for an additional N1, 206,465,000 to be paid to the contractor, Messrs Air Wave Ltd.
Even as the deal continues to fumble and wobble, stakeholders have expressed reservation about the ability of the present customs management led by Ali to finalize the deal and push through with the supply of the scanners, especially on the backdrop of findings that the supply of the single unit security scanner awarded since August 2019 for use of Lagos Premier Port, is yet to be supplied.
In a letter written to the BPP Director General by the NCS on 6th May 2020, and sighted by our reporter, Customs highlighted variations in the exchange rate and tax rate as reasons the purchase failed, and requested a review of the total investment portfolio.
The letter reads in part: “The Bureau of Public Procurement (BPP) may wish to be informed that taxes were not factored into the contract sum approved by the Federal Executive Council (FEC). In addition, the amount was based on the Central Bank of Nigeria official exchange rate of N305 to USD1. Unfortunately, the contract could not be implemented because the required foreign exchange could not be accessed at CBN official rate.”
“In this regard, the Ministry of Finance has held series of meetings with the NCS and the Contractor (Air Wave Ltd) to find the plausible option that would be mutually acceptable. During the meetings, it was resolved that in order to successfully execute the contract, there is need to review the contract sum to accommodate applicable taxes and exchange rate differential.
“After considering all the available options, it was resolved that the offshore component of the contract should be paid in United States Dollar through Letter of Credit (LC) and the Comprehensive Import Supervision Scheme (CISS) account.”
The letter to BPP by NCS was dubbed REQUEST FOR DUE PROCESS ‘NO OBJECTION’ further sought to revise the contract sum to N9253, 890,000.00. The letter states further: “Thus, the amount required to augment the FEC approved contract sum in Naira is N1,206,465,000.00 in favour of Wymo Finance Limited, Messrs Air Wave’s offshore sister company. The LC will become effective upon presentation of relevant shipment documents to the NCS, who will receive the consignment.”
Contacted for reaction, the Customs National Public Relations Officer, Deputy Comptroller Joseph Attah said he is not aware that the service has in any way delayed the purchase of scanners or is making fresh bid to seek for additional fund for the purchase of scanners.
His words, “First of all, I am not aware that NCS is renegotiating scanners contract sums. I don’t know about the document you talking about. But even then, there is no way you’ll say Customs will wait one month, even one week, if there is …you’re saying a contract, I have my doubts, most especially since I am not aware of the contract you’re talking about.
“You said you stumbled on the contract document, well, if you did, I didn’t. So I will not be in a position to react to what I don’t know, unless you avail me the document so I can understand what it is all about, and if I am unable to understand it, I know the appropriate head of department I can meet to get clarification.
“What I know is that customs wants scanners like yesterday, not even today, in other words, customs can never be associated with any delay regarding scanners.”
Stakeholders have expressed concerns about the integrity of the NCS desire to review the contract’s Certificate of No Objection, if it was not acting beyond its scope of decent engagement.
Checks indicate that contracts are preceded by verification exercise based on forensic audit, and that the result of forensic audit in due course gives rise to award of Certificate of No Objection. While those familiar with procurement processes posit that Certificate of No Objection is the most important part of a forensic audit, they wonder why Customs would apply for a Due Process Certificate of No Objection for a contract award to be funded from the budget, if the leadership of NCS is not nursing personal motives.
The controversy may have also widened not only on the ground that the NCS for its own reason failed to take advantage of the 2018 FEC approval, and which received expeditious response by BPP, Customs supervisory Finance Ministry, is rumoured to have searched for a different contractor to handle the scanners supply, and which by all intent and purposes comes across as a vote of no confidence on the contractor.
It will be recalled that Pre-shipment Inspection Agents handed over epileptic scanners at the customs ports in Apapa, Tin Can Island, Port Harcourt Area 11 Onne, and border stations including Seme, Idiroko, Banki and Jibya to the NCS before their exit in 2012.
While the Abdullahi Dikko led NCS adopted ingenious means to maintain the scanners and to keep them running; the effort reportedly resulted deployment of commands Authority to Incur Expenses, AIE, a statutory fund for maintenance of area commands to the task of keeping the scanners functional.
In fact where the AIE proved to have been insufficient, and it was on many occasion as findings by our reporter has shown, the owing commands were believed to have often resorted into further self help, just to keep the cargo scanning system running. The scanners final collapse created a gradual pillage of unattended cargo trucks, which made the 100percent physical examination of imports assumed some form of brisk businesses.
In January 2017, operatives of the Federal Operations Unit Zone ‘A’, intercepted a Mark Truck carrying container load of rifles that had exited the port of Lagos. Several trucks of illicit drugs such as Tramadol have also been seized by enforcement units of the service where resident port officers could not detect them during the so-called 100percent physical examination.
The Dikko commitment to keep the scanners going at all cost however dipped after Col.Hameed Ali, retired, assumed control of the service in 2015, and was disinclined to continue to keep the deteriorated scanners running. Experts posits that what the ‘moribund scanners’ lack was routine and adequate maintenance, further noting that the scanners lifespan were not in question.
Habu A. M, retired Assistant Comptroller of Customs, one of the officers with extensive training in scanning system said “The lifespan of our scanners are still up to fifteen or twenty years. What they need is adequate maintenance, minus regular and thorough maintenance, maybe we will have to be buying scanners every ten years.”
To underscore the importance of cargo scanners, the Customs Area Controller, Apapa Command, Compt. Mohammed Abba-kura, recently said he will be the happiest man to have scanners provided for his command, but lamented that as an area controller, scanners availability or otherwise was not his business.
His innocent assertion strongly highlights the amount of politicking that customs cargo scanners may have assumed. It will be recalled that the Chairman, Seaport Terminal Operators Association of Nigeria, STOAN, Princess Vicky Haastrup, recently tasked NCS to deploy scanners and move away from manual examination of cargoes, noting it is inefficient and does not promote social distancing, given the reality of Covid-19 pandemic.
She said, “We have a situation where people must visit the port physically to do Customs documentation and cargo examination. The Nigeria Customs Service should do everything possible to install functional scanners at the port to reduce the high rate of physical examination of cargoes and to reduce human contacts.
Erudite customs broker and immediate past National President of the Association of Nigeria Licensed Customs Agents, ANLCA, Prince Olayiwola Shittu commenting on the challenges associated with repairs of broken down scanners and the acquisition of new ones summed up the matter as greed.
He said, “It is because of what is in it and those involved. If they have given terminals the go ahead to install scanners, they will go and buy genuine, long lasting scanners, it will make the job easier for them. As the containers are coming down, they’re going through scanners and the photo of the scanned goods is already there in the system where customs, NAFDAC and all the regulatory agencies will have access.
“That way only 10% of cargo would have been available for physical examination. Now everybody, including NASS members are thinking of how to buy scanners, because there will be a cut inside.
“If Customs buy scanners do they have the mechanics that will be working on the scanners? All that delays are manmade. Ordinary airports cannot have functioning scanners; they’re still doing 100% examination on smaller packages not to talk of containers. Who told you our people cannot sabotage scanners?” he asked rhetorically.
Efforts by our reporter to also get reaction and clarification from Air Wave Ltd on the controversial contract proved abortive as the firm did not answer telephone call made to it. The firm did not also respond to a number of text messages seeking clarification relating to the issue, sent to it.