I don't have Project in order to test but I think the issue is a missing space in the string you generate.
You need to seperate customUIxml from the start of the schema namespace,
mso:customUIxml ns:mso
Sub RemoveCustomUI()
Dim customUiXml As String
customUiXml = "<mso:customUIxml ns:mso=""http://schemas.microsoft.com/office/2009/07/customui"">" _
& "<mso:ribbon></mso:ribbon></mso:customUI>"
ActiveProject.SetCustomUI (customUiXml)
End Sub