The Federal Government through the Road Infrastructure Tax Credit Scheme has attracted investments worth N97.47bn from the private sector to fund critical road infrastructure in the country.
Documents obtained by our correspondent from the Ministry of Works and Housing and the Ministry of Finance, Budget and National planning showed that the initiative which is in partnership with companies like Dangote, Nigerian Liquefied Natural Gas companies and BUA group among others have completed the rehabilitation and reconstruction of 33 key road networks across the country in four years.
it did not include the funding of road constructions from the Nigerian National Petroleum Company Limited and SUKUK bonds, totalling N651 billion and N742.5 billion respectively.
The document read, “We are leveraging private sector capital and expertise to construct, repair and maintain critical road infrastructure in key economic corridors and industrial clusters.
“Under the Road Infrastructure Tax Credit Scheme, 33 road projects covering a total length of 1,564.95 km have been approved, pursuant to which private sector companies are incentivised to invest in the construction and rehabilitation of federal and state roads, and subsequently recover their investment back through an innovative tax credit mechanism, setting off credits against corporate tax liabilities.
“About N97.471 billion in tax credits have been approved for issuance.”
The scheme, coded Executive Order 007, is expected to expire in ten years. It was signed by the President, Major General Muhammadu Buhari (retd) on January 25, 2019, as part of efforts to improve the condition of the road infrastructure and transportation in the country.
It is predicated on the recognition to harness Nigeria’s resources, promote national prosperity, and operate an efficient, dynamic and self-reliant economy in the roads transportation sector, as well as other major sectors of the economy.
The scheme focuses on leveraging private sector funding for the construction and refurbishment of eligible road infrastructure projects. The eligible roads are to be approved by the President, on the recommendation of the Minister of Finance and published in the Official Gazette of the Federal Republic of Nigeria.
According to the order, costs accrued by investing in private companies during the construction or rehabilitation of approved roads will be refunded by a grant of tax credits against their future companies’ income tax.
So far, some of the roads constructed include the Apapa-Oworonshoki-Ojota Road in Lagos and the Lokoja-Obajana-Kabba Road connecting Kogi and Kwara States constructed by Dangote Cement and 110km Enugu-Onitsha Road in Anambra State by MTN.
Other roads are Oyinbo-Izuoma-Mirinwayi-Oklama-Afam Road constructed by Transcorp group, Oniru axis of VI-Lekki circulation road in Lagos State by Access bank, Umueme village road, Abia State by GZI Industries, Malando-Garin Baka-Ngwaski Road by Mainstreet Energy, Bode-Saadu-Lafiagi road; Eyinkorin road and bridge by BUA group and construction of Bodo-Bonny Road with a bridge across the Opobo channel in Rivers state by NLNG.
Speaking on the tax credit scheme during a press briefing on the ministry’s achievement recently, the Minister of Finance, Zainab Ahmed, described the initiative as one of the greatest innovations of the Federal Government in its resolve to tackle Nigeria’s infrastructure deficit.She added that the roads selected are critical economic corridors to interested companies and the general public.
She said, “We also have been to launch the Road Infrastructure Tax Credit Scheme, an initiative that started in January 2019. It is a very innovative tool that enables us to use private sector funds to develop funds and then recover their investment over a period of time using tax credits.
“33 Road Projects, covering a total length of 1,564.95 km have been approved, pursuant to which private sector companies are incentivised to invest in the construction and rehabilitation of Federal and State Roads, and subsequently recover their investment back through an innovative tax credit mechanism, setting off credits against corporate tax liabilities.”
On his part, the Minister of Works and Housing, Babatunde Fashola, said the scheme has been successful as more companies were indicating interest to participate in the scheme and help reduce the infrastructural deficit.
The minister gave his response while speaking with journalists during a briefing on ember month programme recently.
He said, “On the tax credit scheme, it is based on Executive Order 07, signed by the president to enable companies to invest their tax ahead of time to develop road infrastructure which has been a very successful model and it has enhanced the development of road infrastructure.
“Currently, many companies are indicating interest to undertake road construction in areas of economic value.”
He noted that no company had defaulted in completing projects and fulfilling the necessary requirement as it is practically impossible to do so.
“We don’t have any reported case of default. secondly, there is unlikely to be a default because if you don’t do the work there is no payment and this is not ascertained by us. There is zero room for default what you can possibly classify as a default is if the contractor is unable to do the work, we change them and bring capable hands.