• Tuesday, May 28, 2024
businessday logo

BusinessDay

Presidency, NASS to agree on Budget Presentation date

Federal Executive Council (FEC ) yesterday approved the 2018 budget for onward transmission to the National Assembly.

Although no figures were released on Thursday, sources close to the Ministry of Budget and National Planning informed Business Day that the government is proposing a total budgetary allocation of N8.6T for 2018.

Government also announced that capital releases for 2017 budget amounted so far to N450b.

This is just as FEC also yesterday approved the new federal government Tax Relief Scheme for Road Infrastructure a policy under the Road Trust Fund (RTF) as part of government efforts to facilitate and incentivize private sector involvement in the provision of Nigeria’s Federal road infrastructure.
The new policy according to the Minister of Finance, Kemi Adeosun, is a form of Public Private Partnership that will accelerate the provision of Federal Roads by allowing private sector operators to collectively fund road provision in exchange for tax credits.

Read Also: Nigeria, others affected by emergencies receive GPE accelerated education grants

The Finance Minister noted that the policy will help to complement Federal Government’s budgetary allocation to roads infrastructure.

Briefing State House Correspondent after the rescheduled federal Executive Council meeting presided over by President Muhammadu Buhari, Minister of Budget and National Planning, Udoma Udo Uzoma informed that the budget has been approved for transmission to the National Assembly.

According to Udoma Udo Udoma “Council approved a draft 2018 budget proposals. So we will be loading with the National Assembly to where on a date in which the president will formally submit the budget to them”

The Minister of Power, Works and Housing, Babatunde Fashola, also announced that the Federal Executive Council approved the construction of 14 kilometer 330KVA transmission line to Transmission Company of Nigeria to get them ready, to evacuate Azura power plant in Edo State when it is ready in May 2018.

The contract, he said , is for the sum of N796.6 million for a period of seven months, just about when Azura should be ready.

Giving further details on the new federal government road infrastructure policy, the Minister of Finance said “Council approved the memo for the establishment of road trust fund structure.

The memo, according to her, “was presented with the input of the minister of power, works and housing. It is the PPP initiative that will allow the private sector to get involved in road construction in exchange for tax credit”

What is unique about the scheme is that it is building on an existing scheme that avails tax credit but is one company per road and we have found that only two companies have been able to take advantage of it”

“The tax will be recovered over a three year period. We expect this to mobilize significant capital into road provision across the country. The ministry of works will be approving the design and the cost of those roads. The BPP will also provide certificates of no objection to make sure that the cost are reasonable, ministry of works will supervise.”

“What we expect is significant road delivery especially in areas for example industrial clusters affected by very bad roads. They can get together, so the road and recover their money through the tax credit system.”

“We expect the impact on revenues to be neutral because we are tightening our tax code but we still put in a limit that no company can apply and use more than 50 per cent of the tax within a year for this scheme.”

“A company doesn’t have to be active in that area, so a bank, oil company, service company could get involved. We are really trying to widen the pool of funds for road construction”

Pressed for details, including bench mark and date of submission of the 2018 budget to the National Assembly, the Minister insisted that “It is the President’s prerogative to submit the budget, submit the proposals and give the details. I will be operating above my brief if I do that, the constitution gives that authority to the President”

“We did promised that the budget will be ready in October and it will be ready in October.”

“We are liaising with the National Assembly because they have to approve the date for the president to come and address them to submit the budget”

Adeosun said the new road infrastructure policy will lead to Increases in funds available for road development and accelerates road provision across the nation, as well as reduce pressure on the Federal Budget by allowing private engagement.

” It will allow for cost reduction by providing a new benchmark in road costing. Private sector participation in what was previously a Federal Government monopoly will create more efficient delivery of road projects. Better negotiation and the promise of prompt payment to contractors, is expected to materially reduce project costs”

Others include “provide alternate funding to the Government for road infrastructure development, create a platform for collaboration among private sector players as well as between private sector and Government, encourage co-operation in business districts affected by poor road infrastructure which will enhance output and reduce business operating costs, as well as businesses to direct funds that would otherwise have been ‘tax Naira’ into much needed areas of infrastructure”

 

Tony Ailemen, Abuja