BY COBHAM NSA, ABUJA – The Federal Government on Thursday moved to address huge infrastructure gaps in the nation’s roads sector with the Federal Executive Council (FEC) approving a tax relief scheme to attract private sector involvement.
The scheme, meant to stimulate private sector’s participation in providing Federal road infrastructure nationwide, came off a Memorandum to establish a Road Trust Fund (RTF) that the Minister of Finance, Mrs. Kemi Adeosun presented to FEC.
Adeosun explained that the Road Trust Fund (RTF) concept is a project jointly developed by the Federal Ministry of Finance and the Federal Ministry of Power, Works and Housing.
She said the RTF will mobilise significant capital to provide roads that would unlock socio-economic development as well as facilitate investments across Nigeria towards achieving inclusive economic growth.
At present, Federal roads bear the burden of over 80 per cent of national vehicular and freight traffic, which account for 17 per cent of the total national road network.
Speaking with State House correspondents at the end of FEC meeting, Mrs Adeosun said the RTF will galvanise and incentivise private sector interest in boosting the Federal road infrastructure.
“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”, the Minister said.
She stated that government will incentivise the private sector through a Tax Credit Scheme that enables all participating firms to claim tax relief based on their amount of capital contributions (on a pro-rata basis).
According to her, “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.”
Mrs Adeosun said under the tax relief scheme, companies are expected 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).
She further said the scheme will allow for cost recovery within a single year instead of three years for economically disadvantaged areas.
The Minister said when completed, the roads would be handed over to the Federal Government that may decide to toll the roads in accordance with the National Tolling Policy (NTP).
Explaining the role of Federal Ministry of Power, Works and Housing, Mrs Adeosun said the ministry will be responsible for approving the road designs, monitoring all approved Road Trust Fund Projects; managing costs and timelines as well as ensuring equal development across Nigeria by re-balancing the Federal budget, where necessary.
She assured that all the costing and contractors would be scrutinised and approved by the Bureau of Public Procurement (BPP) in line with legal requirements, adding that, “This will ensure that costs are not inflated and that unqualified contractors are not used on the projects.”
In attendance at the post-FEC briefing were Minister of Power, Works and Housing, Mr. Babatunde Fashola and Minister of Information and National Orientation, Alhaji Lai Mohammed.
