Following the approval for the Nigerian National Petroleum Corporation’s (NNPC) N621.2billion intervention for construction of federal roads by the Federal Executive Council (FEC), the Ministry of Works and Housing on Thursday said the move was in line with the Presidential Executive Order 007.
It stated that although the NNPC would be providing the funding required for the road projects, the construction process is solely a responsibility of the ministry.
Speaking with the Nigerian Tribune in Abuja, the Director, Highways Construction and Rehabilitation, Engr. Folorunsho Esan, stated that companies are allowed to spend part of their tax on infrastructure.
“Under Executive Order 007, companies are allowed to spend part of the tax they are supposed to pay on infrastructure. Let’s say, for instance, let’s assume NNPC subsidiaries are paying taxes worth N30billion, the law allows them to spend N9billion on infrastructure particularly roads and this is exactly what the NNPC is doing.
“Theirs is to pay for this project, they don’t have any other thing to do with other arrangements,” he said.
He further stated that the funding intervention will also free up resources for some other projects requiring adequate funding.
“Before now resources for some projects have been small compared to what is actually needed but with this, this will free up money for other projects. For instance, instead of N200million given for some projects, we can now have up to N1billion or more for these projects,” he explained.
Another official at the ministry who would not want to be mentioned as he was not authorised to speak on the development stated that the funding would help address funding gaps bedevilling the delivery of road projects.
“The minister referred to what we have in the budget as provision for those roads and what was actually needed, you discover that a road that needs about N33billion maybe only N200millin was provided for it in the budget so what can that do?
“So it is the budgetary challenge that basically led to the slow pace of these projects in the first place apart from the rainy season. So what this has done is to guarantee that there will be sufficient funds for the projects,” the source stated.
What Executive Order No. 007 says
President Muhammadu Buhari had on January 25, 2019, signed Executive Order No. 007 on Road Infrastructure Development and Refurbishment Investment Tax Credit Scheme (“the Scheme”).
The Scheme which is for a period of 10 years from its commencement date is a public-private partnership intervention that enables the Federal Government of Nigeria (FGN) to leverage private sector capital and efficiency for the construction, refurbishment and maintenance of critical road infrastructure in key economic areas in Nigeria.
Participation in the Scheme is open to every Nigerian company, acting on its own or in concert with other Nigerian companies, and institutional investors (hereafter referred to as “Participants”) wishing to construct or refurbish any road identified and designated by the FGN as an “eligible road” under the Scheme.
Participants will be entitled to utilize the total cost, hereafter referred to as “Project Cost”, incurred in the construction or refurbishment of an eligible road as a Tax Credit against their future Companies Income Tax (CIT) liability, until full cost recovery is achieved.
As an incentive, participants will be granted a single nontaxable uplift on Project Cost. The uplift will be included in the total Tax Credit available to each participant.
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NNPC N621.2bn intervention for road construction | NNPC N621.2bn intervention for road construction | NNPC N621.2bn intervention for road construction | NNPC N621.2bn intervention for road construction
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