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Minister of Power,Works, and Housing,Babtunde Fashola has asked private companies to build public infrastructure and get tax credits from the government. Tax credits mean that the government will deduct the amount spent on the infrastructure, from the company’s tax bills. Fashola made the statement while being interviewed by journalists in Abuja.

Government is saying that if you invest in infrastructure that the public will use, it will give you some tax relief as well as commend and welcome the initiative. So, we welcome individuals and corporations that have money to intervene on certain roads and then get tax relief in return.

Fashola also stated that the clause was not a new one, but had been in existence under the Companies Income Tax Act.

It is not a method that is new but it is something that we are going to be using more frequently.

The Minister had recently announced that the Dangote Group would reconstruct the Apapa- Oworonshoki Expressway in exchange for a 3 year tax credit. The Nigerian Liquified Natural Gas (NLNG) has also being awarded a tax credit for the shouldering half of the construction cost of the Bonny-Bodo road being built in Rivers State.

Why is government doing this ?

A large proportion of roads in the country are owned by the Federal Government which is hampered by a lack of funds. While the Ministry of Works has received N90 billion as capital allocation so far, the amount is grossly inadequate to fix roads that are in a state of disrepair.

A few questions remain unanswered

While the move is admirable, several questions remain unanswered. Government has not stated the exact cost of some of the roads being reconstructed, and how it arrived at the 3 year tax credit. Group Executive Director of the Dangote Group, Edwin Devakumar had recently denied allegations of being unduly favoured by the government, but did not disclose the exact cost of the road.

Onome Ohwovoriole has a degree in Economics and Statistics from the University of Benin and prior to joining Nairametrics in December 2016 as Lead Analyst had stints in Publishing, Automobile Services, Entertainment and Leadership Training. He covers companies in the Nigerian corporate space, especially those listed on the Nigerian Stock Exchange (NSE). He also has a keen interest in new frontiers like Cryptocurrencies and Fintech. In his spare time, he loves to read books on finance, fiction as well as keep up with happenings in the world of international diplomacy. You can contact him via onome.ohwovoriole@nairametrics.com

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