FG To Adopt Tax Credit In Funding Federal Roads In Ogun State
President Muhammadu Buhari may consider extending tax credit as funding option for the reconstruction of three strategic roads in Ogun state.
Nigeria faces a critical infrastructure deficit projected at over $3trn in the next 26 years with an average annual budget of approximately $29bn in the last 10 years.
To combat these shortfalls, the Federal Government has incentivised private sector participation in the provision and maintenance of key infrastructures across the country.
On the 25th of January, 2019, Buhari relying on the powers conferred on him by Section 23(2) of the Companies Income Tax signed Executive Order No. 007 on “Road Infrastructure Development and Refurbishment Investment Tax Credit Scheme 2019”.
The Order establishes a ten-year scheme known as the Road Infrastructure Development and Refurbishment Investment Tax Credit Scheme which seeks to encourage Public-Private Partnership intervention in the construction/refurbishment of road infrastructure projects in Nigeria.
The private participants of the scheme provide the funds for the construction/refurbishment projects and in exchange, the participants are entitled to recoup the funds provided as a credit against the Companies Income Tax to be paid.
The various tax credit schemes created are projected to enable companies that are willing and able to spend their funds on the construction, provision and maintenance of various key infrastructures across the country, recover their full construction costs as tax credits, over a period.
Speaking at the event in Ogun State, Buhari said the three roads that may be considered for the funding option are the Lagos-Ota-Abeokuta Road; the Ota-Idiroko Road and the Sagamu-Ogijo-Ikorodu Road.
The federal government had earlier approved the reconstruction of the 100km Sagamu Interchange-Papalanto-Ilaro Road to be handled by Dangote Group.
Buhari also assured Nigerians that two major federal roads under construction –the Sagamu-Benin Expressway and the Lagos-Ibadan Expressway would be inaugurated before the end of 2022.
The president’s promise came sequel to the request by the Ogun State Governor, Prince Dapo Abiodun, during the inauguration of five key projects in the state.
Abiodun had, in his speech, sought special funding by the federal government for more infrastructure in the state.
The governor specifically noted that the state has the highest number of federal roads than any other state in Nigeria, thus the need for the federal government’s intervention to fix those roads, which he described as strategic.
Buhari expressed delight that the 14 km Ijebu Ode-Mojoda-Epe Road inaugurated by him has been reconstructed into a modern expressway by the state government.
He noted that the impressive road would complement the Sagamu-Benin Expressway that the federal government is currently reconstructing, also due for inauguration this year.
“Just across the road is the 42-kilometre Sagamu-Interchange-Abeokuta Road which the state government has reconstructed and equipped with street lights.
“That road enjoys a direct linkage with the Lagos-Ibadan Expressway that the federal government is rebuilding and due for completion later this year.
“I am particularly impressed by the quality and standard of your road projects, and the creative way you have deployed resources to reconstruct and rehabilitate them.
“It is significant to note that the two road projects being commissioned today are federal roads. This is an example of constructive engagement, cooperation and collaboration between the states and federal government.
“These roads also fit well into our rail transportation masterplan that connects Lagos, Nigeria’s economic capital, to Kano, with Ogun State having more rail stations, along the Lagos-Ibadan rail corridor,” the President said.