Federal Government has succeeded into luring private sector in road projects across the country by allowing private sector operators to collectively fund road provision in exchange for tax credits.
This, according to the minister of finance, Kemi Adeosun, who spoke to news men shortly after the meeting of the Federal Executive Council (FEC), at the Aso Villa, Abuja, today, Thursday, will complement the Federal Government’s budgetary allocation to roads.
The minister said that the government approved a tax relief scheme to attract private sector involvement in the provision of Federal road infrastructure across the country, adding that the approval was the outcome of a Memorandum for the setting up of a Road Trust Fund (RTF), which she presented at the FEC meeting which was presided over by President Muhammadu Buhari.
She said that the Road Trust Fund concept was jointly developed by her ministry and the ministry of Power, Works and Housing.
Adeosun said that the RTF would mobilise significant capital into road provision in order to unlock socio-economic development as well as facilitate investment across all areas of Nigeria to achieve inclusive economic growth.
She said that Federal roads carry more than 80 percent of national vehicular and freight traffic, accounting for 17 per cent of the total national road network.
The minister explained that the RTF would facilitate and incentivise private sector involvement in Nigeria’s 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.
“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 tax relief scheme, 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 said that the tax relief would allow for cost recovery within a single year instead of three years for economically disadvantaged areas.
When completed, the minister said, the roads 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, she explained that the ministry would be responsible for approving the road designs, monitoring all approved Road Trust Fund Projects by managing costs and timeliness as well as ensuring equal development across Nigeria by rebalancing the Federal budget, where necessary.
She said 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.” [myad]
