Why Senate Backs Tax Credit Scheme Of The Federal Ministry Of Works, Lauds The Initiative As Beneficial For Bridging The Gap In Financing Road Infrastructure In Nigeria

Written by Hon. Barr. Orji Uchenna Orji, Special Adviser [ Media) to the Honourable Minister of Works

In keeping with his commitment to the tenets of checks and balances and separation  of powers emphasized  by the Renewed Hope administration of the President of Nigeria, His Excellency, President Asiwaju Bola Ahmed Tinubu GCFR, the Honourable Minister of Works, His Excellency Sen Engr Nweze David Umahi CON led the critical  departments of his Ministry to honour the invitation  of the Senate Commitee  on Finance on an interactive  session in respect of the funding  of critical roads,  NNPCL Funding and Infrastructure Development and Refurbishment Investment Tax Credit Scheme held at the Conference  Room  of the  Senate on 22nd February 2024.

As part of the powers of  oversight by the National Assembly, the Senate Commitee  on Finance ably chaired by Distinguished  Senator Mohammed  Sani Musa, CON invited  the Federal Ministry  of Works to ascertain the level  of performance of the  funding  of the road projects  captured  under the Tax Credit Scheme, the rationale  behind  the creation of the  Federal Government’s Executive Order  No. 007 of 2019 passed by the past administration  and the constitutionality  of the Executive  Order, having  regard  to section  80 of the 1999 constitution  of the Federal Republic of Nigeria  as amended.

As part of his remarks, the Senate  Committee Chairman said, “We need to know the beneficiaries of that tax credit and the essence of the job that they have done today. Having said that, going also by what you said, funds should all come to the Federation account. Appropriation is a different thing. Road is not the only problem we have in this country. We equally have challenges with health and others. So when this money comes into the pool, the federation account, we can now appropriate accordingly”

The subject  of discussion, as it where, provoked different points of conversations  by the  Distinguished  Committee members, after which  the Hon. Minister of Works  was given the floor to address the concerns raised by the committee  members.

He gave an overview  of the structure and the status of the Tax Credit Scheme as well as the philosophy  behind the creation  of the Executive  Order, which, according  to the Honourable Minister, was a product of the decision  by the National Economic Council under the past administration, designed to fill the funding  gap in the road infrastructure  development through fronting loading  of Tax by the private sector  to fund  eligible  road projects.

According  to the Hon. Minister,  this scheme  would incentivise the private  sector to participate in the efficient  and effective development of roads across  their economic  corridors and industrial  clusters, which provide value for money. The programme, which  has so far attracted  funding  for about 85 highway  projects, is receiving  funding  from  Dangote Industries,  Nigerian Liquified  Natural Gas Ltd (NLNG),  Nigeria National Petroleum  Petroleum  Corporation Ltd (NNPCL),MTN Nigeria  Telecommunications  Ltd.

He  also spoke on the Ministry’s  efforts in scopping  the projects  and making  sure that design complies with the word’s best standards. He added that aggressive  supervision  was helping  in ensuring  quality  project delivery across the nation.

The Minister gave an example  of  Benin- Warri road being done under the Credit  Scheme and explained  the innovations introduced by the Ministry  under him to bring enduring  solutions to the road failures.

He said. “Then we now have from Benin to Warri. That’s where some of the projects are listed. If you look at the documents we submitted, you will see that we analyzed the project zone by zone. And so we also looked at the nature of the roads from Benin to Wari. It’s also a very terrible situation. So we began to fight with the contractors, and I said there is no amount of asphalt you use on this road that will stand. So what we did was to excavate all the soil up to 1 meter depth, fill back with 500cm lumps, fill back with 400cm sand. And then now go back to fill with stone base, allow it for traffic to be on it. After 30 days, then you put an additional 10cm stone base. That is 55% cement. And then you have to use concrete.”

He also said that the Presidential  Infrastructure  Development  Fund ( PIDF) was established for other strategic and critical projects that are capable of carrying Average  Daily  Trafick of  10,000 vehicles per day, including Abuja- Kaduna-Zaria-Kano highway.

According  to the Honourable  Minister, ” Mr. President has just approved that the critical projects under PIDF be funded. I’m still pushing  for the release of money based on Mr. President’s directive, and that is for Abuja-Kaduna,-Zaria-Kano Highway, it is very key and very important to Mr. President. But I have an issue with Julius Berger Nigeria  Plc and I’ve just set up a committee to go and jointly review the project because they are asking for N1.5 trillion for that 375-kilometer dualized road. And for me, it is not justifiable.”

The Distinguished  Senators were generally  happy  with the explanations given by the Hon. Minister  of Works  on the importance of the Tax Credit Scheme and  the  Presidential Infrastructure Development Fund, the funding performance  so far and why it may not come as an appropriation, being that the funds are still the money in the hands of the  private  sector front loaded  for some years in the future.

The Senators  spoke in turns starting from the former Chairman Senate on Works, His Excellency Senator Mohammed A. Aliero, who spoke in defence of the Tax Credit Scheme: “It (the Tax Credit Scheme)  came because of the infrastructure deficit we have in the country, which budgetary provision cannot be enough to meet it. If we continue budgeting the way we are budgeting, believe me, it will take us 30 to 40 years before we can complete road rehabilitation and other repairs. The  only way we can do it is to look for extra funding. And to the best of my  knowledge, the State Governors were fully involved in this tax related scheme. There was a meeting between the President and the Governors. The President told them that we have a very serious infrastructural deficit in the country, and the only way we can attend to  it is to use tax credit. And they all agreed. ”

The Chairman  of the Senate Committee on Finance, in his concluding  remarks, said, “My conclusion is that the committee will look at all  that we have just heard from you ( the Hon. Minister) and make our decisions. But based on what we have heard from you, we are convinced that the Tax Credit policy of the Federal Government is a welcome initiative, which is worthwhile and we believe that every exigency has a purpose for which that period needs. And that is what called for the Presidential Order. And what we will appeal to both NNPC, Federal Ministry of Works, and the contractors are to make sure that those projects are completed.”

With this wonderful  executive- legislature  understanding and reciprocity in tackling  the  economic challenges facing  the country, one can be sure that the administration of Mr. President is on the steady  part of binging  economic  prosperity  to our country.

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