Nigerian National Petroleum Corporation (NNPC), the state oil corporation responsible for the exploration and operation of refining, petrochemicals, and products transportation as well as the marketing of oil products in Nigeria, has committed to financing the reconstruction of 21 federal roads in Nigeria for a cost of US$ 1.51bn.
Of the 21 roads, nine were selected in the Center-North, three in the North-East, two in the North-West, two in the South-East, three in the South-South, and two in the South-West. The roads total 1,804.6 linear kilometers.
The oil company approved the necessary funds for the execution of works on the said roads during the last weekly meeting of the Federal Executive Council held on Wednesday, the 27th of October 2021.
Tax Credit Program for the Development and Rehabilitation of Road Infrastructure
The NNPC’s commitment to financing the reconstruction of 21 federal roads in Nigeria is part of the implementation of a government policy dubbed the Tax Credit Program for the Development and Rehabilitation of Road Infrastructure.
This program was established by a presidential decree signed in January 2019 and it prescribes the participation of private sector companies in the densification of the national road network for a period of 10 years. The companies shall pre-finance the realization of various construction or renovation projects and in exchange obtain the reimbursement of the funds disbursed in the form of a credit against the corporate income tax due to the state.
Reportedly, with an average annual budget of approximately US$ 29bn over the past 10 years, of which only around 30% has been allocated to capital spending, the Federal Government of Nigeria faces unavailability of sufficient resources to fund all of its road projects which is why it has decided to involve private companies in this projects.