Vice President Yemi Osinbajo has said that by adopting Public Private Partnership’s (PPP) cost-effective measures, the Federal Government is delivering 19 road projects across the six geo-political zones in the country totaling 780.15km.
Osinbajo’s spokesman’s Laolu Akande, in a statement, said the Vice President spoke at a webinar on Public-Private Partnerships on Tuesday.
The webinar was organised by the Law firm of Yusuf Ali and Co in collaboration with the Business Law Department of the Faculty of Law, University of Ilorin.
Osinbajo listed some of the road projects being undertaken by private companies and advancing to completion.
“The reconstruction of Apapa-Oshodi-Oworonshoki-Ojota Road in Lagos State–34 km by Dangote Industries Limited.
“The reconstruction of Obajana-Kabba Road in Kogi State–43km– by Dangote Industries Limited.
“The construction of Bodo-Bonny Road and Bridges across Opobo Channel in Rivers State–38km– by the Nigerian Liquefied Natural Gas Limited.’’
Osinbajo said that in 2017, the Federal Government introduced the Road Trust Fund (RTF).
He said that the fund was a tax credit scheme to incentivise private sector participation in the development of federal road infrastructure.
“The relief is enjoyed by a deduction of 50 per cent of the amount spent on the project from the income tax that would have been payable by the company.”
The Vice President also referred to the Executive Order No. 007 of 2019, the Companies Income Tax (Road Infrastructure Development and Refurbishment Investment Tax Credit Scheme).
“The objective of the Scheme is to accelerate public road infrastructure development by incentivising private sector entities to construct and refurbish eligible roads across the country in exchange for tax credits, which could then be applied against company income tax payable.
“19 roads have been approved so far by this administration under the Scheme, totaling, 780.15 km.
“These roads, in eleven (11) States across the six geo-political zones, are being executed by six private sector players in the manufacturing and construction industries.”
He emphasised the importance of PPPs in funding critical infrastructure projects.
“First, public revenue both for States and the Federal government have fallen precipitously in the wake of the disruptions of the COVID 19 pandemic.
“For the Federal Government, barely 30 per cent of the budget is available for capital expenditure, besides a national infrastructure deficit. So, clearly there is a need to bring in the considerably larger size of private capital to participate in public infrastructure projects.”
“Dangote’s Lekki project comprising a refinery, fertilizer factory, and a subsea pipeline is estimated to cost 15 billion dollars–about N6 trillion almost half of the entire federal budget of N13 trillion,” he said.
He added that access to capital from international commercial lenders was cheaper for private companies with a good reputation.
Osinbajo said that in thinking through the PPP framework, stakeholders must factor some of its challenges; especially in PPP’s where the private partner’s compensation was from user-based payments such as tolls on roads or fees in an airport concession.
Citing an example with the Lekki-Epe road concessioning, the Vice President said it was one of the best models.
He said that a number of foreign banks and infrastructure companies were involved in it.