Dangote deal spurs FG to adopt tax reliefs in funding road projects
A new road project financing model is emerging in Nigeria following the recent seal of agreement between the federal government and Dangote group in the reconstruction of Apapa-Oworonshoki Expressway which allows the company to complete the job and enjoy 10 years tax holiday.
According to the deal, Dangote Group will deliver the road beginning from Apapa Port complex through Tincan Port, Coconut, Mile 2, Oshodi and terminate at old toll gate near Owornshoki using concrete and not asphalt.
Explaining more in Abuja on the new financing regime, the Minister of Power, Works, and Housing, Mr. Babatunde Fashola, said in Abuja during a progress report meeting with contractors handling major road projects for the government that government is resorting to a tax recovery funding arrangement for the execution of some major road projects in the country.
According to him, the new arrangement became imperative as a result of revenue shortfalls, which had made funding of projects challenging for the government.
He said government was exploring innovative ways of funding infrastructure projects, and as such, would allow companies operating within tax reliefs to undertake key road projects in the country.
Fashola noted that companies with the capacity and willingness to reconstruct existing or build new roads in the country would be encouraged by the government to go ahead, and subsequently claim tax reliefs as recompense for their investments.
The minister averred that “We welcome other like-minded individuals and companies who have that kind of money to intervene in certain roads, and claim tax relief back”.
“What it really means technically is that government is spending in advance the taxes that it should collect to quickly respond to places where there is pain, because some of these companies, if they make profits, should pay taxes at the end; but the government is saying if they spend some of the taxes on public infrastructure, they will get some relief. We commend and welcome this initiative.
“That is the long term solution to the lockdown in Apapa. There will be some discomfort, but as we begin work on that area, people should expect some relief.”
The minister also stated that the N100bn Sukuk bond, which the government recently launched, would be channelled into funding 25 major road networks, which fall within the A1 to A4 arteries.
However, the Christian Association of Nigeria (CAN) has kicked against the Sukuk funding scheme, saying there are chances of using the strategy to islamise Nigeria considering the fact that it remains a religious window.
