From Juliana Taiwo-Obalonye, Abuja
The Federal Executive Council (FEC) meeting presided over by Vice President, Yemi Osinbajo, has approved for the Nigerian National Petroleum Corporation, (NNPC) to take over the reconstruction of 21 federal roads across the six geopolitical zones of the country.
This is in line with Executive Order No. 007 of 2019 cited as the Companies Income Tax (Road Infrastructure Development and Refurbishment Investment Tax Credit Scheme) Order, 2019 (“EO7 of 2019” or “the Scheme”), signed by President Muhammadu Buhari.
Dangote Group was the first to take advantage of the EO7 of 2019 to fix the Obajana-Kabba road from it’s income tax.
Recall the National Union of Petroleum and Natural Gas Workers (NUPENG) had suspended it’s earlier plannd nationwide strike that was to hold on October 11th to give negotiations a chance, after the NNPC warned that the strike could disrupt fuel supplies.
NUPENG had called the strike to protest against the poor state of roads in the country, saying the situation endangers the lives of drivers.
Briefing State House Correspondents at the end of the council meeting, the Minister of Works and Housing, Babatunde Fashola, SAN, the selected 21 roads are 1804.6 kilometers.
The Minister said it was a strategic intervention under the Federal Government Road Infrastructure and Refreshment Tax Credit Scheme.
Fashola fuether explained that under Executive Order 7, it allows the private sector to deploy in advance the taxes they would pay for infrastructure development.
He said nine of the selected projects are in North Central, three in North East, two in North West, two in South East, three in South-South, and two in South West.
Fashola speaking more on council’s approval, said he presented three memoranda to the Council that were approved, explaining that two of the memoranda were on road contracts.
He said the first memorandum had to do with a section of Calabar-Ikom-Ogoja road especially the section to Apet Central where he said had a problem with steelreinforced drain that was discovered there.
“Those drains were put there, about 42 years ago and 86 of them have failed and we need to replace them now with concrete rain drains to allow water pass through otherwise the retention of water will badly impact the road.
“As a result of that, we have to revise the scope of works from rehabilitation to construction in order to remove all the old steel drains that are corroded and replaced them with concrete drains.
“It is over 75 kilometers road and that will require an augmentation contract by an additional sum of N12 billion. So that memo was approved.
“The second memorandum relates to the road infrastructure tax credit scheme. You recall the Executive Order seven signed by Mr. President allowing private sector operators to identify infrastructure such as roads for which you deploy your taxes in advance with tax and pay.
“So you recall that I had briefed you here about the use of that policy like the Dangote Group from Obajana to Kabba, Apapa to Oworoshoki.
“Earlier this year, there were five other roads, the Kaduna Western bypass, the Lekki Port road, the road from Shagamu through Papalanto and couple of others and there is one road in Maiduguri. That was approved about N320 something billion.
“So today, we have another player. We have all the interested players who are still showing interest but we haven’t concluded. We have another player who has shown interest and committed to deploy taxes.
“It’s the government corporation known as NNPC. So NNPC has identified 21 roads that it wants to deploy. So now the instructive thing about this is that this initiative helps government to achieve many things, including Ministerial Mandates Three and Four, which we discussed at the last retreat if you recall was energy sufficiency, electric power and petroleum energy distribution across th country.
“Of course petroleum energy distribution is being impacted positively and negatively, as the case may be the transport infrastructure, which is the Ministerial mandate four.
“So, NNPC has sought and council has approved today that NNPC deployed tax resources to 21 roads covering the total distance of 1,804.6 kilometers across the Six geopolitical zones.
“Out of those 21 roads, nine are in North Central, particularly Niger state. And the reason is that Niger State is a major storage center for NNPC. So the reason NNPC is doing this is to facilitate the total distribution across the country.
“We have seen and have heard every year Niger State gridlock, the governor complaning that his roads are being damaged by trucks, by those who overload the trucks after damaging the roads themselves now protest the damage that they sometimes have induced. Anyway, this is the final solution to that problem.
“So there are nine like that in north central, there are three in the Northeast. Two in the northwest, two in the southeast, three roads, the entire Odupani – Itu – Ikot Ekpene road in LOT 1, 2 and 3 now fully covered.
“Then in the southwest, you have the Lagos-Badagry expressway, the entire junction and you also have the Ibadan to Ilorin in Oyo-Ogbumosho section. So that’s it.
“In the south east you have Aba-Ikot Ekpene in Abia and Akwa Ibom states. So that’s a major link, then you have Umuahia to Ikwuano to Ikot Ekpene road and so on and so forth. In the Northwest, it is Gada-Zaima-Zuru-Gamji road, and also Zaria-Funtau -Gusau-Sokoto road.
“In the northeast, it is Cham-, Bali Serti and Gombe-Biu road. The roads impacted in north central include Ilorin -Jebba-Mokwa-Bokani sections I and II, Suleja-Minna sections I and II, Bida-Lambatta, and then Agaie-Katcha-Baro road. Then Mokwa-Makera-Tegina-Kaduna all in Niger State.
“So, as I said, it is a total of 21 roads. What will happen as a result of this is that there will be no financing problems with regarding the execution of these roads anymore. So, some of these roads that I have mentioned, let me tell you, what has changed. For example, Aba-Ikot Ekpene road has an estimate of about N30.33,399 billion to complete it. The provision in the budget this year is only N200 million. If you look at Suleja-Minna road section II, it has N25.763 billion to complete it. The provision in the budget this year is just N100 million. So, with this intervention, all those roads now will be fully funded, we won’t have budgetry challenges and financing challenges. So, council approved this as a strategic funding these roads.”
He explained that the payment for total sum for the 21 road contracts was not a one off payment.
Fashola said, “The whole package is N621,237,143,897.75 billion. Let’s be clear, it will be spread over periodic tax for about three years. On time frame of completion, the completion time already exist. They have scheduled completion times. What has hobbled and hampered them is that the annual budgetary provisions have not been enough. So, what it does now is that government can save, like the Lagos-Ibadan, 2nd Niger bridge arrangement and all of those type roads.”
On if government will still go ahead to release the funds budgeted for the roads to be fixed by NNPC, he said: “What you see here is that, I mentioned some cases, like for the Oku Iboku power plant section, it has N79 billion to finish, there was no provision at all in the 2021 budget. In the places where there’s provision maybe N100 million, we are more than halfway to the budget we started implementing, so it probably has been paid and where it has not been paid, the certificate is pending, we will pay and from then on, we will move to the new financing structuring just as we transited the second Niger Bridge, the Lagos-Ibadan expressway from the old budgetary arrangement to the new arrangement. We will transit this too. So those are administrative thing and we will be meeting all the contractors to review all the agreements and all the performance and then we will take it from there.
Also briefing, the Minister of Power, Aliyu Abubakar said he presented three memos which sought approval for the award of contract for design, manufacture, supply, construction of 55 Kilometer Agu Akwa Umuchu 132 KVA double circuit transmission line and substation having two transformers two by 60 MVA at Umuchu Umuchu with two by 132 KV line bay extension at Agu Akwa for transmission company of Nigeria (TCN).
This, according to the Minister, is between Anambra and Enugu State.
He said Council approved the contract in Favour of Messrs Cartlark International Limited and has dollar and Naira components respectively to finance the project.
“The naira component is N4,044,309,380.69 inclusive of 7.5% VAT and 7.5% contingency payable to the Central Bank of Nigeria at the prevailing exchange rate with the completion period of 34 months. This is part of the expansion and modernization of the TCN transmission grid and council has approved that.
“The second one was approval for award of contract for a procurement and supply of two “Fail Safe” 60 MVA, 132 /33KV transformers for transmission Company of Nigeria. They are protecting themselves against fire outbreak.
“They are made in a way that once there is any fire outbreak it will not affect the transformers. So, these are modern equipments that are being procured to replace the old one, this is also part of the modernization of the equipment on the transmission lines.
“So, the total control sum is N1,018,432,930.68 made up of €1,904,237.50 (offshore component) plus N155,875,000 (onshore component) inclusive of 7.5% VAT, with delivery period of nine months. This was also approved by council.
“The third one is approval for variation of an ongoing contract for the construction of two by MVA 330 132/33 KV two by 60 MVA 132/33 KV substations, these are all transformers. And four by 330 KV line bay extension at Akure, and four by 330 KV line bay extension each Ochigbo and Benin north was awarded by the ministerial attenders board MTV commercials to messers Metelak SAL Engineering and constructing limited, on 27 September 2011, in the sum of $19,025,535.45 plus N1,068,728,996 inclusive of 5% VAT as at that time. So, it became obvious and necessary to seek for this variation.
“So, the contractor requested and the necessary checks were done and the contract is now being increased by this memo to the council.
“This approval seek to increase the contract amount from the amount stated. The offshore components still remains, the onshore is now increased to N1,460,398,661.75. This is with inclusive of 7.5% VAT and the council graciously approved this. So, there is an increase of the sum of N377,669,675.75.
“But this is not a one off payment. So, let’s be clear, it will be spread over periodic tax of about three years. On time frame of completion, the completion time already exist. They have scheduled completion times.