The Nigerian National Petroleum Corporation (NNPC) yesterday handed over a N621 billion symbolic cheque to the Ministry of Works and Housing in furtherance of the recent tax credit road infrastructure funding arrangement approved by the Federal Executive Council (FEC).
At the event, the Minister of Works and Housing, Mr. Babatunde Fashola dispelled insinuations that the NNPC was taking over the job of the ministry, stressing that the arrangement was coming under Executive Order 7, which existed during the last administration but was never deployed.
Fashola explained that the instrument was first activated on the Obajana-Kabba road as well as to address the Apapa-Oworonsoki expressway, stressing that since then, a lot of progress had been made.
He noted that when the government started the use of Executive Order, it was met with a lot of criticism that it was specifically made for Aliko Dangote, but added that even smaller companies can now come together to do smaller roads.
“So, this is not an order for one person, it is an order for all businesses and we are now seeing that a conglomerate like Dangote Group and now the oil industry has come in to cover 21 roads of about 1,800 kilometres. That is massive and it’s a show of confidence by the NNPC,” he noted.
Fashola said the telecoms sector had also begun to show interest in the arrangement as a strategic expansion of the private sector to the development of the country’s infrastructure, pointing out that there will be no review of the cost of the projects in the future.
“We have agreed that nobody will be asking for a variation. We have put in a governance process which allows us to do certification within a certain number of days,” he said, adding that, “The NNPC will have no more than 30 days to pay.”
According to him, this new redefinition of project funding in the sector will enable contractors order more materials and machines and roll out work, stressing that people will begin to see the intervention of the NNPC by the end of the dry season.
In addition, to ensure that timelines are adhered to, he stated that the works ministry has a prescribed number of days within which to act, to approve the certificates.
“The money does not belong to the contractors. It is going to the quarry, to those supplying diesel, sand, lubricants and other materials,” the minister said.
To the minister, this would increase the flow of money in the economy and ultimately lift more people out of poverty as promised by President Muhammadu Buhari.
He clarified that the NNPC was not taking over the construction of Nigerian roads, saying that it’s only putting in its tax liabilities to the Federal Inland Revenue Service (FIRS) which is being devoted to the roads.
“NNPC is not taking over roads, NNPC is not constructing roads, NNPC is just putting forward its tax liabilities to the authority which is supposed to collect, which is the FIRS, and they are dedicating it to build roads that have been awarded and would have been completed but for insufficient budgetary provisions.
“Let me make it clear that this is a tax credit intervention and essentially, the private sector company is putting forward what should have been its tax compensation for liabilities to government,” he stated.
Also speaking, Group Managing Director of the NNPC Limited, Mallam Mele Kyari, described the initiative as remarkable because of the difference the funding will make in the country’s roads.
Represented by the Chief Financial Officer, Mr. Umar Ajiya, the GMD noted that due to the incessant vandalism of the NNPC’s pipelines, the national oil company had resorted to hauling products by road.
“This is a very remarkable event simply because the condition of the road network in the country is affecting our business in our quest to participate in the energy security of Nigeria.
“We are charged with the responsibility of wetting the country with petroleum products but most of our pipelines have been vandalised over the years which has resulted in the haulage of these products to trucks along some of these national road networks.
“These roads have also suffered some failure over the years and sometimes we find it difficult to pass the road. It is on that note, that we found it necessary and very important to step in to support the federal ministry of works in funding these number of these roads,” he explained.
In his comment, the Chairman, FIRS, Muhammed Nami, explained that the scheme encourages taxpayers to use company income tax payable by them to fix Nigeria’s critical infrastructure in exchange for tax credit.
“This tax credit is issued after a confirmation process has taken place using our audit procedures that verify that monies that ordinarily should be invested in these roads were actually invested in the roads. Once that is done, we then issue a tax credit to the taxpayer.
“This is also to support the fact that there is a social contract between the taxpayers and the government. What government is using the Executive Order 007 to do is to give value to taxpayers’ money.
“This is unprecedented and very necessary for us to fix the roads in Nigeria. One, because the annual budgetary allocation for these roads are not only minimal but absolutely insufficient.
“ Thus government has to come up with this strategy in making sure that the roads, some of which were constructed in the 70’s and 80s and are currently bad, are fixed in order for us to move goods, persons, and farm products from one location to the other without any problems,” he said.
More importantly, Nami explained that it would bridge the critical infrastructure gap that Nigeria faces and implored the consultants to make sure to deliver on the roads on time.
The occasion also witnessed the signing of an MoU, among the stakeholders, including the ministry, FIRS, NNPC and the contractors.
While nine of the road projects are in north-central, three are in the north-east, two in the north-west, two in the south-east, three in the south-south and two in the south-west.