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FG’s proposed Road Trust Fund (RTF) -Tribune Editorial

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The Federal Government, in October, announced the establishment of a Road Trust Fund (RTF), a form of public private partnership that will accelerate the provision of federal roads by allowing private sector operators to collectively fund road projects in exchange for tax credits. The RTF policy gives private operators an incentive to fund infrastructure development. In return for their funds, they would get tax relief based on the amount of capital contribution.

 Participating companies will be allowed to recover all the costs they incurred on road infrastructure as a tax credit against total tax payable (including up to 10 per cent for cost of funds). If the cost is more than what they should pay as tax, the government would give them concessions.In other words, completed roads would be handed over to the Federal Government. But such roads may be tolled in accordance with the National Tolling Policy if the Federal Government deems it fit to do so.  Some companies like Dangote and the Nigeria Liquefied Natural Gas (NLNG) have identified roads they would like to build. Others have been invited to select and cost the roads they are interested in.

According to the policy, the Bureau of Public Procurement, in line with the legal requirements, would ensure that costs are not inflated and that unqualified contractors are not used for the projects. The Ministry of Works, Power and Housing would approve the road designs and monitor all approved RTF projects by managing costs and timelines as well as ensuring equal development of roads across Nigeria. According to the Minister of Ffinance, Mrs Kemi Adeosun, “the scheme is designed in such a way that financial intermediaries will be promoting Road Trust Fund projects and soliciting commitments from interested companies.”

Currently, federal roads bear more than 80 per cent of national vehicular and freight traffic and account for 17 per cent of the total national road network. Declining revenue and competing needs have rendered the Federal Government incapable of meeting the required road construction projects to accelerate economic growth and physical mobility. It is believed that the private sector can play a vital role in addressing the road infrastructure deficit, freeing up resources for other purposes while ensuring the benefits provided by having good roads. However, this tax relief policy for private companies willing to inject funds into the construction of roads needs to be properly worked out in order for the desired benefits to be achieved. Otherwise, the effort by the Federal Government to address the huge deficit in road infrastructure may fail before it even starts.

According to Section 80 (1) of the 1999 Constitution, as amended, “All revenues or other moneys raised or received by the Federation (not being revenues or other moneys payable under this Constitution or any Act of the National Assembly into any other public fund of the Federation established for a specific purpose) shall be paid into and form one consolidated Revenue Fund of the Federation.” If the taxes included in the tax holidays in the RTF involve moneys that should be paid into the Consolidated Revenue Fund, then it will be clearly illegal and unconstitutional. Although the states have not raised eyebrows about the tax holidays for the private sector on the RTF policy of the Federal Government, they will go to court to challenge it in no distant time.

The  state  governors have their own challenges, priorities and alternative approaches to road construction and maintenance. Indeed, some, like the governor of Sokoto State, Aminu Tambuwal, have proposed that the Federal Government should hand over some of the roads to states because state governments are closer to the people and have more efficient methods of supervision. Tambuwal believes that if this is done, vast numbers of major roads and highways in the country would be effectively maintained. In crafting the policy, the Federal Government should have taken the state governments along, instead of limiting consultation on the policy to the private sector.

Furthermore, giving away public amenities to concessionaires in exchange for tax must be done in strict compliance with the law and due process to avoid corruption. No stone must be left unturned to ensure that the quality of job done is commensurate with the amount in tax relief given. It is the responsibility of the government to provide roads. This means that the government must protect the interests of the public and ensure that tax money is prudently spent.

Tribune

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