Revisiting NCS’ Failed Scanners Purchase

Eromosele Abiodun writes that the Nigeria Customs Service should capitalise on its existing information communication and technology platform that has robustly supported its revenue collection drive, provide scanning services and back off its nebulous chase for a more costly options

In February 2017, during an inspection tour of the ports in Lagos, the Comptroller General of the Nigeria Customs Service (NCS), Col Hameed Alli (rtd) had promised to end the long wait for cargo scanners to be provided at the ports and guaranteed that scanners would be provided in the first quarter of 2018.

Specifically, he had said: “New cargo scanners to arrive in Nigeria next year. The new scanners would arrive the ports by the first quarter of 2018, to make cargo examination easier, faster & Surer.”

Responding to stakeholders’ demand for the audit of N9.2 billion scanners at the ports, the CGC had noted that: “After examining the scanners, only two can be immediately repaired and put to use, but the others will be repaired over time.”
At another forum on October 4, 2017, the CGC again promised, saying: “Hopefully, before a couple of months from now, we will have scanners at the ports.”

However, three years after his first promise, no single scanner has been acquired by the NCS, fueling speculation that the NCS boss’ promise was just a political statement.

Since 2015 when the last batch of scanners installed at the nation’s seaports was handed over to the government under conditions contravening its contractual provisions, the eventual breakdown of the equipment has left the maritime business in dire straits. For several years running, the ports have remained without scanners, causing a clog to the efficiency of the port system.

Mobile and fixed scanners are essential equipment for international businesses as it helps in facilitating ease of doing business.
This is because it aids in addressing modern procedures for cargo examination for importation, exportation, security and other purposes.

Unfortunately, this all-important equipment has been absent from the Nigerian ports due to the total breakdown of the previously provided ones.

Experts believe the greater consequence is that lack of functional scanners has taken Nigeria away from countries in West and Central Africa seeking to position as operators of modern port system and a hub for maritime activities in the two regions.
Maritime expert and a member, Task Force to Reform Customs in 2010, Lucky Amiwero, blames the collapse of scanners at the nation’s ports on the doorsteps of the NCS and the Ministry of Finance (MoF).

According to him, the scanners that have eventually packed up at the seaport now was mismanaged by MoF and Customs because both organisations did not ensure that the equipment were properly transferred to the government after the expiration of the contract tenor of the concessionaires.

Based on the provisions of the contract between the federal government and contractors in 2006, Amiwero explained, the intervention committee, which was appointed by Ngozi Okonjo-Iweala in 2014 was supposed to have ensured that functional scanners were transferred to the federal government upon the completion of the contract tenor.

He regrets that what the committee eventually recommended did not conform with some of the provisions of the contract when the concessionaires were leaving.

He said: “Under Article 4 of the contract, there was provision for pre and post-investment process. The contract was such that we have a post-investment deal for a functional equipment transfer.This means that the concessionaire shall ensure the transfer of the scanners to the federal government in top working condition. It includes six months after the transfer, replacement with brand new components, including labour and maintenance. But in 2014 / 2015, all the scanners collapsed. Nigeria has not benefitted from the post-investment aspect of the contract; so we did not enjoy the post-investment component of the contract.”

“The manufacturing companies are supposed to do all the component replacement before handing over to us and also provide maintenance for the scanners until six months after the expiration of their contract before handing over to us.
Over one million euro was allocated for this aspect in the contract. But this was not done and that accounts for the state of the scanners today.”

Clog to port efficiency
For now, the lack of scanners at the nation’s seaports has continued to constitute a clog to the efficiency of the port system.
While the NCS has resorted to crude, manual cargo inspection otherwise called 100 per cent physical examination, there have been times that dangerous goods like arms, ammunition and prohibited drugs exited the ports undetected, This would not have been were the scanners available.

Recently the Chairman, Seaport Terminal Operators Association of Nigeria (STOAN), Vicky Haastrup, decried the high rate of manual examination of cargoes at the nation’s seaports and asked the NCS to deploy technology to drive the process.

Manual examination of cargoes, she argued, is not efficient and does not promote social distancing at this COVID-19 pandemic era.
She said: “The NCS 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. Customs should also make it possible for consignees to process their release documents and make necessary duty payments online without having to visit the port or Customs commands.

“There is also need to reduce the number of government agencies that participate in cargo examination at the port in addition to reducing the number of checks carried out on cleared cargos both inside and outside the port premises. Customs’ clearing process must become smart at this time.”

Amiwero also share the view of the STOAN boss, saying that physical examination is not done anywhere in the world.
“The process is nebulous, it is time-consuming and expensive overall.Invariably this is why we are running the most expensive port. Globally, 80 per cent of cargoes are not subjected to 100 per cent physical examination,” he said.

Wild goose chase
Meanwhile, the NCS rather than capitalise on its existing Information Communication Technology (ICT) platform that has robustly supported it’s revenue collection drive to also provide scanning services in a more cost-effective and seamlessly synchronising manner, the service has embarked on a nebulous chase for a more costly and probably unreliable option.

Also, the NCS failed to utilise a ”No Objection Certificate” earlier given to it by the Bureau for Public Procurement (BPP) in 2018 for the purchase of three units of scanners.

THISDAY findings revealed that the NCS wrote to the BPP in May 2020, requesting for “due process no objection” for cost variation due to non-inclusion of withholding tax, value-added tax and exchange variation for purchase of three units of Rapiscan mobile cargo scanners.

The exchange rate variation and cost implication alone is leading to more losses for the government given the differential in the exchange rate at that time and now.

The NCS is projecting a total contract sum of N9,253,890,000 at an exchange rate of N360 to the United States dollar. Further findings revealed that $26,385,000 was earlier approved for the contract by the Federal Executive Council at an exchange rate of N305 to a dollar.

The NCS is also seeking an additional N1,206,465,000 to be paid to Wymo Finance Limited, Messrs Air Waves. The letter of credit is expected to become effective upon presentation of relevant shipping documents to NCS that was expected to receive the consignment.
The local payment amounting to N2,975,400,000 net of taxes for which the contractor has provided performance bond is expected to be made periodically based on achievement of milestones in the project while taxes amounting to N330,600,000 was being expected to be remitted to the Federal Inland Revenue Service(FIRS).

Managing scanners
Meanwhile, the National President, Association of Nigerian Licenced Customs Agents (ANLCA), Tony Nwabunnike, wants professionals to handle the scanner project and its operation.

He said: “Yes we may have customs personnel that can handle scanners, but they are not professionals on it. If you have professionals on it, it works more effectively than when those on it are going through training on the job.Globally, Customs is not to be the custodian of scanners; we need to do things right. Customs should be in line with the scan operators.”

He advised that procuring, installation and operation of the scanners should be executed through a PPP arrangement contract so that they take liability and face the consequences if the scanners break down.

“The previous scanner regime handled by Cotecna, Globalscan and others were efficient. When the previous scanners were installed they were handled by professionals and it worked well; they trained the customs personnel as well on its usage, but when the professionals left it, some of those scanners were not functioning except for those by Globalscan, which was the only indigenous company in the scan,” Nwabunnike said.

Influx of arms, drugs
The unavailability of scanners at the nation’s ports has continued to have dire consequences. For instance, in January 2017, operatives of the NCS’s Federal Operations Unit (FOU), Zone A, Ikeja, intercepted a Mack truck carrying container load of rifles that had exited the port of Lagos.

That is not all, several trucks of illicit drugs like tramadol have been seized by enforcement officers of the NCS. Officers stationed at the port could not detect them during the examination due to reasons of possible corruption and lack of scanner to electronically detect container contents quickly and accurately.

Though the NCS has been outstanding in revenue collection with over N569 billion collected as at end of May 2020 bringing it closer to achieving and surpassing its about N900 billion target for this year, it has been severally advanced that the Federal Ministry of Finance should wrap up discussions to provide the scanners.

Epileptic operation
Three companies were involved in a contract to provide scanners for the country, which ran from 2011. They are: Cotecna Destination Inspection Limited, Globascan and Societe-Generale du Surveillance (SGS). The scanners provided by these companies were alleged to be epileptic in operation until they finally parked up.

A 12-man ad-hoc Committee of the House of Representative chaired by then Deputy House Leader, Leo Okuweh Ogor, had invited the service providers to give accounts of their knowledge of the Single Window project as well as the contract performance of their respective organisations in respect to desired efficient scanning at the ports.

Scanners were part of the Destination Inspection Service regime, which replaced pre-shipment inspection in Nigeria from January 2006 under a Build-Own-Operate (and)-Transfer (BOOT) arrangement for an initial period of seven years before additional extension.

With a broad-based scope of services, the Destination Inspection companies were to amongst other things, deploy a Computerised Risk Management System (CRMS), provide a Data Base for Price, carry out Customs Valuation and Classification of goods, install Scanners at designated ports of entries, carry out a physical examination of goods in conjunction with Customs officers when necessary, as well training and capacity building of customs officers for the future management of the project.
Cotecna got a higher share of the scanner deal and had installed one 9.0 MeV Fixed Dual-view scanner, and one 3.8 MeV Mobile scanner at Apapa port in Lagos.

The company also had three scanners at the Tin-Can Island port namely, 9.0 Mev Fixed Dual View Scanner; 3.8 MeV Mobile Scanner in Ashaye Terminal; and a 3.8 Mev Mobile Scanner at the RORO Terminal of the port.

Cotecna also had a 145-180 Hi-Scan Pallet Scanner each, at both the Abuja and Kano International Airports. On the land border areas, the scanner provisions included a 3.8 MeV Mobile scanner at Jibiya and another at Banki Border.

SGS installed scanners in Port Harcourt Port, Onne Ports, Port Harcourt International Airport, Ilorin Airport and Idiroko Border while Globascan, the only Nigerian company in the scanner deal was very slow in installing at Seme Border, Warri and Calabar Ports.
Most of these scanners failed even during the operation of the contract that customs officers had to resort to physical examination to prevent smuggling, uncover concealment and fight other importation related illegalities such as false declaration and under-declaration.

While these companies carried out training of customs officers on the operations of the scanning systems in specific areas like data and image analysis, programming and others, the non-functioning of the system optimally may have reduced the capacity of the service personnel to handle scanning.