President Muhammadu Buhari yesterday signed Executive Order 007 of 2019 on the Road Infrastructure Development and Refurbishment Investment Tax Credit Scheme at Council Chambers of the Presidential Villa, Abuja.
The new order allows private companies such as Dangote group, Unilver, Lafarge Africa and the rest to construct major roads across the country and be paid in the form of tax credit.
According go the Global Competitive Index of 2018, Nigeria ranks 11th on the list of countries with the world’s worst road quality and network.
In his remarks at the signing, President Buhari said the Executive Order is to demonstrate the commitment of his administration to conceive, design, develop and deliver Public Private Partnerships with notable investors so as to close the road infrastructure gap in the transportation sector.
He described as disappointing the reliance on budgetary allocations to fund roads development, given that the National Assembly has not always passed budget proposals in an expeditious manner.
He noted that various models have been adopted to address the infrastructure gap since he oversaw the successful implementation of the Petroleum Trust Fund roads development programme in the 1990s.
Part of his address read: “Despite challenges, this Administration remains committed to keeping our promises to deliver qualitative roads and transportation infrastructure to our citizens, communities and businesses. In this regard, we have consistently adopted innovative solutions to complement the annual budgetary spending on infrastructure.
“You may recall that on 25th February, 2018, I approved the establishment of a Presidentaial Infrastructure Development Fund, through which the Nigeria Sovereign Investment Authority is investing in critical roads and power projects nationwide such as the 2nd Niger Bridge, Lagos to Ibadan Expressway, East-West Road, Abuja – Kano Road, and the Mambila Hydroelectric Power Project.
“To date, N71 billion of funding of this N2.5 trillion initiative, has come from the Nigeria Sovereign Investment Authority, the Nigeria Liquefied Natural Gas Dividend Account, the Federal Budget, as well as counterpart funds from China Exim, China Development Banks, and other development partners.
“The N100 billion raised by the Debt Management Office through the Sukuk issuance in September 2017 has been fully deployed by the Ministry of Power, Works and Housing for 25 critical economic road projects located across each of the six geo-political zones.
“Furthermore, in December 2018 we raised an additional N100bn (One Hundred Billion Naira) for funding of another set of 28 road projects also spread across the six geo-political zones. Through these innovative funding mechanisms, we have been able to address the challenges of project funding, cost variation and completion risks that have plagued the development of the nation’s critical roads infrastructure assets.
“Today’s event marks another milestone in changing the narrative that has dogged past efforts at developing critical roads infrastructure nationwide. Pursuant to the Road Infrastructure Development and Refurbishment Investment Tax Credit Scheme, 19 eligible road projects are to be undertaken by 6 leading manufacturing and construction firms, located in 11 States, and in each of the six geo-political zones.”
“Through this scheme, companies that are willing and able to spend their own funds on constructing roads to their factories or farms, will recover their construction costs by paying reduced taxes, over a period of time. We shall ensure complete transparency in these set-offs.
“I call on other local and international investors, as well as the state governments, to embrace this roads infrastructure development scheme. I personally invite you to submit viable proposals for more road projects, such that, in time, the scope of this initiative will cover all 36 states of the Federation.
“I note the prudent fiscal risk management measures which the Minister of Finance has adopted to protect the integrity of this programme. The minister has submitted to me, a Fiscal Implications Report that indicates how the programme’s tax credits are to be administered in a manner that does not impair our revenue projections.
“The minister has also laid out a set of revenue enhancement and other fiscal measures, which are targeted to increase revenues over the medium-term horizon pursuant to the Strategic Revenue Growth Initiatives programme, which she launched here in Abuja, on Wednesday, 23rd January 2019.
“I have charged the Minister of Finance to ensure that the management committee, which is saddled with the responsibility of implementing this roads infrastructure development scheme, is promptly inaugurated, so as to enable the swift and smooth takeoff of this landmark initiative.
“I trust that the members of the management committee, under the leadership of the Minister of Finance, as well as the Minister of Power, Works and Housing, will discharge their duties in a diligent, responsible and patriotic way.”
The Chairman of Dangote Group, Aliko Dangote speaking on the impact of the bill said, “the impact is that it will make businesses run smoothly and also more profitably, it will reduce the cost of doing business because as we speak today all of you know the deplorable conditions of roads in Nigeria.
“This order will allow private sector to use their capital, their knowhow and also their efficiency in terms of delivering roads in time. It’s not going to be business as usual, when you look at Abuja-Lokoja road started by the administration of former President Obasanjo up till today it is still ongoing, it might still be ongoing in the next five years because it is very difficult to deliver roads based on budgets.
“But as we speak now what is going to happen for example by just even government doing Apapa Oshodi-Oworoshoki and Ojota , these roads alone will save people billions and billions of Naira. I don’t know what other companies have lost but I think we apart from losing percentage of our profitability we have actually lost more than N20 billion in the last one year paying demurrage because we have not been able to remove our goods from the ports.
“So signing this order will actually allow us to quickly go and build that road while now you see trucks littered all over Lagos, so this will help quite a lot. And when you look at other areas it will help motorists like you who are using the roads you can easily go to your village even though this is restricted to economic roads to move goods and services.”