NNPC: Supporting Federal Government’s Road Infrastructure Projects Through Tax Credit Scheme

On January 25, 2019, when President Muhammadu Buhari signed 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 to critical road infrastructure in the country.

The Executive Order 007 was designed to empower private companies to finance construction or refurbishment of federal roads designated as “Eligible Roads” under the scheme and recoup their investments through deduction of the approved total costs expended on the project from their annual Companies 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, refurbishment of critical road infrastructure in key economic areas in Nigeria.

Under the initiative, the Private participants of the scheme provide the funds for the construction or refurbishment projects and in exchange, the participants are entitled to recoup the funds provided as a credit against the Companies Income Tax they are expected to repay.

One striking feature of the scheme is that Participants will be entitled to utilize the total cost referred as ‘Project cost” incurred in the construction or refurbishment of an eligible road as tax credit against their future Companies Income Tax liability, until full recovery is achieved.

Three years after the President signed the Executive Order No. 7, the move has started are paying off. Already, some road construction projects financed by private companies and non-profit organisations are either going on, or at different stages of completion.

One of the companies that have keyed into the initiative of the Federal Government is the Nigerian National Petroleum Company Ltd.

Interestingly, the NNPC Ltd is involved in operations across the oil and gas value chain from exploration and production of hydrocarbon and processing of natural gas all the to nationwide distribution of petroleum products such as petrol, diesel, and kerosene.

The NNPC’s assets base and operations span across different regions of the country and the oil and gas industry has remained one of the biggest and most important economic drivers through foreign and domestic investments.

Like any other responsible Corporate Citizen, the NNPC prioritizes road infrastructure as part of its Corporate Social Responsibility Projects.

To ensure efficient and sustainable petroleum products distribution across the country, the NNPC Ltd keyed into the initiative to improve the road infrastructure across the country.

Exactly 14 months ago, the National Oil Company had expressed interest to invest in the reconstruction of selected federal roads in order to sustain a smooth supply and distribution of petroleum products across the country.

Through the initiative, the NNPC is to fund the reconstruction of 21 Roads across the country at a total cost of N621.24bn.

The total distance to be covered by the funding is about 1,804.6 kilometres for federal roads which are also critical to NNPC’s operations.

Under the scheme, the road projects will be funded by NNPC and the equivalent amount deducted by the Federal Inland Revenue Service from the National Oil Company’s tax obligations.

Through the scheme, the NNPC will be serving as an enabler for building the Nigerian economy and it is collaborating with key stakeholders such as the Ministry of Works and the FIRS on the execution of the initiative.

This is in response to the plight faced by petroleum products marketers in transportation which affects nationwide distribution.

Currently, engagements are ongoing with unions and other stakeholders to ensure smooth delivery of projects according to standards and specifications.

Speaking during an inspection tour of some of the projects being funded by the NNPC, the Company’s Group Chief Executive Officer, Mallam Mele Kyari said the NNPC understands the importance of road infrastructure to the development of the Nigerian economy, adding that this why the National Oil Company will be committing additional N1trn to the scheme to fund more roads.

The projects visited by Kyari are the Agbara-Badagry road project in Lagos, and the Bida-Lambata road project in Niger State.

He visited these project sites with members of the NNPC Board, officials from the Federal Inland Revenue Service led by the Executive Chairman Muhammad Nami, and top officials in the Ministry of Works as well as other critical stakeholders.

He said NNPC has disbursed N15bn for the reconstruction of the Lagos Badagry Expressway under the Federal Government Road Infrastructure Tax Credit (RITC) Scheme.
The N15bn represents a 100 per cent payment of the funding of the Lagos-Badagry road rehabilitation under the tax credit funding of the NNPC Ltd.

Kyari said the NNPC will continue to commit massive investments in critical projects in the country for the benefit of Nigerians.

He described the tax credit scheme which is the initiative of President Buhari as a game changer in the Federal Government’s quest to scale up infrastructure projects in the country, noting that the NNPC will continue to support any effort of government aimed at growing the Nigerian economy.

Kyari expressed satisfaction with the progress of work so far done in the project sites visited, adding that the NNPC has done its part in releasing all the funds needed for their execution.

The GCEO said, “We are very happy about the state of this road development. We are very happy with this intervention across the country not just in this place.

“We are doing 1,800km across the country. We are taking another set of over N1trn of investments in road infrastructure in the country.

“We believe that this tax credit system which Mr. President has put in place is the game changer for our country.

“We believe that in the next 24 months, there will be massive change to the entire road network in this country and this is why NNPC is your company and working for all of us.

“We think that it is the best way to intervene and bring up our infrastructure. We are adding another set of cash, we have not reached the final numbers, but I know it is over N1trn.”

He said the projects are being implemented with the consultant which President Muhammadu Buhari used when he was the Chairman of the Petroleum Trust Fund.

He expressed optimism that with the experience of the consultant, quality roads will be delivered to Nigerians through the project

He added, “Across the country, everywhere we have our consultants. A world class consultant that was used by Mr President when he was the PTF Chairman to deliver all those projects that you all recall.

“We are using the same consultants in partnership with the Federal Ministry of Works and the FIRS to make sure that this works for all of us and we can see from the quality of work.

“This is the best framework for delivering infrastructure in the country. We are funding partners. We are development partners and enablers. So, whatsoever the FIRS and the Ministry of works approve for us, we will consider from our cash flow and fund them.”

Also, Nami stated that: “This road will facilitate trade, movement of people from one destination to another and ensure safety of lives and property.”

The Director, Roads, Ministry of Works, Engr Folorunso Esan in an interview with THE WHISTLER hailed the NNPC for its intervention on critical road infrastructure in the country.

Specifically, he said through the intervention, the NNPC has been able to improve the pace of the project from ten per cent to about 40 per cent within a very short period of time.

He said, “From what we can see, the intervention from NNPC has taken this project from 10 per cent to 40 per cent in a very short time.

“And we have achieved a lot and you can see that the construction is still ongoing and what they have done already is quality work which everyone has attested to. And they are ready to complete this project with the funding available.

“In the next 12 months we should be able to deliver this project because the drainages are in place, just for earth works and pavement works, it cannot take us more than 12 months,” he said.

Speaking on the gridlock being caused by the Lagos-Ibadan Expressway project, he said the contractor would clear all impediments and move out of site by December 15 to make the highway free for Yuletide.

Earlier, Olukorede Keisha, Federal Ministry of Works, gave a brief of the project, listing the drains, culverts and other construction works done on various stretches.

Also speaking during an interview with THE WHISTLER, the Oba of Ibereko in Badagry, Oba Israel Adewale Okoya said residents of the area have suffered untold hardship because of the poor state of the road.

Specifically, he said prior to the NNPC’s intervention, motorists spent between two to six hours daily on the traffic in the area.

However, he said with this intervention by the NNPC, the travel time of the road has been reduced to less than an hour.

He said, “In two, three, four years ago, we had a problem here, from Badagry to Agbara is two to four hours, to mile 2 is six hours. But today, under one hour you can get to Agbara and we are happy.”

The road projects being funded by the NNPC under the scheme are dualization of Ilorin-Jebba-Mokwa/Bokani Junction Road Section 1: llorin-Jebba in Kwara State; dualization of Ilorin-Jebba-Mokwa/Bokani Junction Road Section II: Jebba Mokwa Bokani Junction in Kwara and Niger States; dualization of Suleja – Minna Road in Niger State; and dualization of Suleja-Minna Road in Niger State Phase II Reconstruction of Bida-Lambata Road in Niger State

There is also Agaie-Katcha-Baro Road; emergency repairs of failed section of Mokwa-Makera-Tegina Road Kaduna State Border in Niger State; Minna-Zungeru-Tegina Road; Bida-Minna Road Niger State; rehabilitation of Cham-Numan Section of Gombe-Yola Road in Adamawa State and construction of Bali-Serti Road in Taraba State.

Similarly, the NNPC is funding the rehabilitation of Gombe-Biu Road in Gombe/Borno States; rehabilitation of outstanding sections of Gada-Zaima-Zuru -Gamji Road Phase II in Kebbi State; rehabilitation of Zaria-Funtua-Gusau-Sokoto-Bimin Kebbi Road; rehabilitation of Umuahia (Ikwuano)-Ikot Ekpene Road: Umuahia-Umudike in Abia State; rehabilitation of Odukpani-ltu-(Spur Ididep Itam) Ikot Ekpene Road in Cross River State; dualisation of Oku-lboku Power Plant Section of the Odukpani -Itu-lkot Ekpene Road in Cross River/Akwa Ibom States.

The rest are the dualization of outstanding portion of Odukpani-ltu-lkot Ekpene: Lot 2 Lagos-Badagry Express Way; dualization of Ibadan-llorin Road (Route. A2) Section II: Oyo-Ogbomoso Road in Oyo State and dualization of Aba-lkot Ekpene Road in Abia/Akwa Ibom State

Practically every Nigerian and every sector of the Nigerian economy relies on one form of transportation or the other, with road being the most utilised means. This, therefore, connotes that a good road network where commuters arrive at their destination without any delay occurring from bad roads, or where goods are safely and timeously transported from one location to the other is bound to foster economic progress.

No doubt, good road infrastructure affects the flexibility and mobility of workforce from one point to the other, and it is indeed central to good governance and public welfare.

Undoubtedly, a seamless road network and infrastructure lowers production costs and raises productivity particularly especially in the agricultural sector where the transportation of crops from the farm to the consumers is a major factor in the production chain.

Even in the industrial sector, a good road transportation network is required to bridge the gap between the place of production to the point of final consumption. Research has shown that there is a strong and positive relationship between road transportation and economic growth in Nigeria. It has equally been demonstrated that transportation infrastructure can improve the well-being of the citizens in Nigeria.

Through these road projects being implemented by NNPC and other stakeholders, it is expected that it would boost the efficient distribution of petroleum products across the country, improve other economic activities that are dependent on road transportation and social benefits as well as sustain energy security for Nigerians.