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    Tax credit: NNPC gets FEC’s nod to rehabilitate another 44 roads nationwide

    ByEditor

    Jan 19, 2023

    By Bassey Udo

    The Nigerian National Petroleum Company Limited was on Wednesday granted its request to undertake the rehabilitation of another 44 roads across the country.

    The approval was granted by the Executive Council of the Federation during weekly meeting in Abuja presided over by Vice President Yemi Osinbajo.

    The roads rehabilitation exercise which is under the second phase of the Federal Government’s Road Infrastructure Development and Refurbishment Investment Tax Credit Policy by the NNPC Limited and its subsidiaries, would gulp about N1.9 trillion.

    The spokesperson to the vice president, Laolu Akande, who disclosed this disclosure while briefing reporters at the end of the meeting at the State House, said FEC approved NNPC’s request to invest in the reconstruction of selected federal roads in the country.

    Akande who spoke on behalf of the Minister of Works and Housing, said
    the Council approved the proposal by the Ministry for the NNPC to reconstruct 44 federal roads with a total length of 4,554 kilometres.

    He said the Council also approved the concession of nine other federal roads across different parts of the country.

    In 2019, President Muhammadu Buhari signed executive order No. 7 for the utilisation of the tax credit by companies on the the road infrastructure development and refurbishment investment.

    The scheme enabled the federal government to leverage private-sector capital and efficiency for the construction, refurbishment and maintenance of critical road infrastructure in key sectors of the economic in the country.

    On Wednesday, Akande said following the issuance of requisite Full Business Case (FBC) compliance certificates by the Infrastructure Concession Regulatory Commission (ICRCN), FEC also approved a 25-year concessions for nine road corridors under the pilot phase of the highway development and management initiative.

    “The roads that will be under this first phase are the Benin-Asaba corridor, Abuja-Lokoja-Onitsha-Owerri-Aba-Shagamu-to Benin, Abuja-Keffi-Akwanga-Lafia-Makurdi, Kano-Maiduguri, Enugu-Port Harcourt, Lagos-Ota-Abeokuta, and Lagos-Badagry-Seme,” he said.

    Akande said the works and housing ministry also got the council’s approval for the augmentation of the contract for the rehabilitation of the Oshogbo-Ilesha road, phase one, in Ilesha-Oshogbo, Osun state.

    The contract was awarded to Messers Orizon construction company in the sum of N1.2 billion, he explained, adding that the subsisting contract sum was revised from N3 billion to N4 billion, representing an increase of 33 percent from the original sum.

    scheme.

    In the first phase of the roads rehabilitation scheme, the NNPC undertook to spend abouy N1.6trillion to fix Nigerian roads as a demonstration of its commitment as a responsible corporate citizen.

    The company prioritized road infrastructure rehabilitation as part of its Corporate Social Responsibility (CSR) Projects following incessant protests by National Association of Road Transport Owners (NARTO) arm of the National Union of Petroleum and Natural Gas Workers (NUPENG) over recurring accidents and loss of lives of its members as a result of bad roads across the country.

    Executive Order 7 was signed into law by President Muhammadu Buhari on January 15, 2019 as part of the Federal Government’s efforts to improve the condition of road the over the over 195,000 kilometres of roads network infrastructure and transportation in the country.

    The law introduced the Road Infrastructure Development and Refurbishment Investment Tax Credit Scheme with the objective to unlock funding from the private sector to critical road infrastructure in the country.

    It was designed to empower private companies to finance construction or refurbishment of federal roads designated as “Eligible Roads” under the scheme and recoup their investments through deduction of the approved total costs expended on the project from their annual Companies Income Tax.

    The Roads Infrastructure Scheme is a Public-Private Partnership (PPP) intervention that enables the Federal Government to leverage private sector capital and efficiency for the construction, refurbishment of critical road infrastructure in key economic areas in Nigeria.

    Participants under the arrangement are entitled to utilise the total cost, 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.

    The NNPC became one of the first companies to have keyed in to the scheme by prioritizing road infrastructure as part of their CSR Projects.

    Under the initiative, the NNPC had expressed interest to invest in the reconstruction of selected federal roads to ensure a sustained and uninterrupted supply and distribution of petroleum products across the country.

    Few months after the initial announcement of the release of N621 billion to undertake the revamping of selected roads across the country, the company also announced plans to invest over N1 trillion for a similar purpose.

    In the first phase, the NNPC said it was going to construct a total of 1,804.6 kilometres of roads at a total cost of N621,237,143,897.35, with the North-central getting the highest chunk of N244.87 billion and the South-south N172.02 billion.

    While inspecting the rehabilitation of the Lagos-Badagry Road, as part of the 21 roads funded by the NNPC Limited under the Scheme. the Group Chief Executive Officer of the NNPCL, Mele Kyari, the the South-West region benefitted with a total allocation of N81.87 billion; N56.12 billion for the North-east, while the South-east got N43.28 billion allocation and the North-west N23.05 billion.

    Under the scheme, Kyari said the equivalent amount spent on the road projects funded by the NNPC would be deducted by the Federal Inland Revenue Service (FIRS) from the National Oil Company’s tax obligations.

    He said through the scheme the NNPC would serve as an enabler for building the country’s economy by collaborating with key stakeholders such as the Ministry of Works and the FIRS on the execution of the initiative.

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