As part of efforts to unlock socio-economic development, facilitate investment and achieve inclusive economic growth, the Federal Executive Council on Thursday approved a tax relief scheme to attract private sector investors in the provision of federal road infrastructure across the country.
This follows a Memorandum for the setting up of a Road Trust Fund, RTF, presented by Finance Minister, Kemi Adeosun, to the council at its meeting presided over by President Muhammadu Buhari.
The RTF concept was jointly developed by the Federal Ministry of Finance and the Federal Ministry of Power, Works and Housing.
A statement from the Finance Ministry indicated that Federal roads carry more than 80 per cent of national vehicular and freight traffic, accounting for 17 per cent of the total national road network.
Finance Minister explained at the end of the council meeting that the RTF would facilitate and incentivise private sector involvement in Nigeria’s federal road infrastructure.
Minister of Power, Works and Housing, Babatunde Fashola and Minister of Information and Culture, Lai Mohammed, were also at the post-FEC briefing of State House correspondents.
Adeosun said, “It is a form of Public Private Partnership that will accelerate the provision of Federal Roads by allowing private sector operators to collectively fund road provision in exchange for tax credits. This will complement Federal Government’s budgetary allocation to roads.
“Private sector participation is being incentivised through a Tax Credit Scheme that enables all participating companies to claim tax relief based on the amount of capital contribution (on a pro-rata basis).
“We have already consulted with the private sector in the development of the RTF and some companies have already identified roads they wish to reconstruct and are organising their funding. However, this scheme is designed such that Financial Intermediaries will be promoting Road Trust Fund projects and soliciting commitments from interested companies.”
Under the TRS, companies will be allowed to recover 100 per cent of costs incurred on road infrastructure as a tax credit against total tax payable (including up to 10 per cent for cost of funds).
Adeosun further noted that the tax relief would allow for cost recovery within a single year instead of three years for economically disadvantaged areas.
According to the minister, the roads, when completed would be handed over to the federal government who may decide to toll the roads in accordance with the National Tolling Policy.
On the role of the Federal Ministry of Power, Works and Housing, Adeosun explained that the ministry would be responsible for approving the road designs, monitoring all approved Road Trust Fund projects by managing costs and timelines as well as ensuring equal development across Nigeria by rebalancing the federal budget, where necessary.
She added that all costs and contractors would be scrutinised and approved by the Bureau of Public Procurement in line with legal requirements.
“This will ensure that costs are not inflated and that unqualified contractors are not used on the projects,” she stated.
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