The President of Nigeria, President Muhammadu Buhari has given his consent for the Nigerian National Petroleum Corporation Limited (NNPCL), to invest N1.9tn in the reconstruction of 44 federal roads under the tax credit policy. This was done during the Federal Executive Council (FEC) meeting, held at the Presidential Villa, Abuja; and was presided over by the Vice President, Prof. Yemi Osinbajo.
The spokesman to the Vice President, Laolu Akande, spoke on behalf of the Minister of Works and Housing, Babatunde Fashola and briefed State House correspondents on the new development.
“So, the council approved the proposal by the Ministry of Works and Housing for the reconstruction of 44 proposed federal roads with a total length of 4,554km in the total sum of N1.9tn,” Akande said.
The said approval came 15 months after the NNPC indicated interest in investing in the reconstruction of the selected federal roads in order to have a smooth supply and distribution of petroleum products across the country.
On January 25, 2019, the president signed the Executive Order 007 which was the instrument that brought about the Road Infrastructure Development and Refurbishment Investment Tax Credit Scheme.
The objective was to unlock funding from the private sector for critical road infrastructure across the country. It was designed to empower private companies to finance the construction or refurbishment of federal roads designated as “eligible roads” under the scheme, and recoup their investments through the deduction of the approved total costs expended on the project from their annual Company Income Tax.
The road infrastructure scheme is a public-private partnership intervention that enables the Federal Government to leverage private sector capital and efficiency for the construction and refurbishment of critical road infrastructure in key economic areas in Nigeria
Under this initiative, the private participants of the scheme will have the funds for the construction or refurbishment of projects available and in exchange, the participants are entitled to recoup the funds provided as a credit against the Company Income Tax they are expected to repay.
With the initial programme, the NNPC is currently constructing a total of 1,804.6km of roads at a total cost of N621,237,143,897.35
The project funding breakdown showed that the North-Central geo-political zone got the highest share of N244.87bn for the construction of 791.1km of roads. The North-Central is made up of Benue, Federal Capital Territory, Kogi, Kwara, Nasarawa, Niger and Plateau states.
The South-South geo-political zone ranked second as the highest beneficiary of the NNPC Road Infrastructure Development and Refurbishment Project, with the sum of N172.02bn for a total of 81.9km of roads. The zone is made up of Akwa-Ibom, Bayelsa, Cross-River, Delta, Edo and Rivers states.
The South-West came third with a total allocation of N81.87bn for the construction of 252.7km of roads. The region is made up of Ekiti, Lagos, Osun, Ondo, Ogun and Oyo states.
The NNPC also allocated the sum of N56.12bn to the North-East for the construction of 273.35km of roads under the scheme. The states expected to be covered under this zone are Adamawa, Bauchi, Borno, Gombe, Taraba and Yobe.
For the South-East geo-political zone, the sum of N43.28bn was marked for the construction/rehabilitation of 122 km of roads. The zone is made up of five states, including Abia, Anambra, Ebonyi, Enugu and Imo.
Further breakdown of the NNPC schedule showed that the least allocation went to the North-West geo-political zone, which is made up of Kaduna, Katsina, Kano, Kebbi, Sokoto, Jigawa, and Zamfara. The zone was allocated the sum of N23.05bn for the rehabilitation of 283.5km of roads.
In conclusion, the road projects are currently being funded by NNPC, and the equivalent amount is deducted by the Federal Inland Revenue Service from the national oil company’s tax obligations.