The deal was valued at USD414.9 billion. Legal or equitable mortgage on all of the project company's interest in the project site, land and buildings and fixed plant and machinery. Advised the International Finance Corporation (IFC), a member of the World Bank Group, in connection with its investment in a 120MW greenfield solar photovoltaic (PV) power project in Kogi State, Nigeria. Enter to open, tab to navigate, enter to select, https://content.next.westlaw.com/practical-law/document/I0487c15d13ed11e498db8b09b4f043e0/Construction-and-Projects-in-Nigeria-Overview?viewType=FullText&transitionType=Default&contextData=(sc.Default), Construction and Projects in Nigeria: Overview, https://iclg.com/practice-areas/project-finance-laws-and-regulations/nigeria. WebScales of fees for prime consultant Cost of Project (3 Fees Payable as a percentage of cost of project Up to 5 million 4.73% Next 10 million or part thereof 450% Next 15 million or 4.25% Next 45 million or part thereof 4.00% Next 75 million or part thereof 3.50% Next 150 million or part thereof 3.00% Next 200 million or part thereo! The main stages are: Selection of projects in each sector to be implemented on a PPP basis by the relevant ministry, department and agency (MDA) charged with the responsibility of regulating that sector. Contracts for the KanoJibia and Port Harcourtaiduguri lines were confirmed by the Federal Executive Council. Service fees are also liable to VAT at 7.5%. This law is expected to provide a much-needed overhaul of the Nigeria's oil and gas sector, thereby creating multiplier effects across the entire construction chain and the economy. The most heavily negotiated provisions are those relating to the contractor's liability in specific events of default. A change request will trigger an obligation on the contractor to submit a proposal describing how it will implement the requested change, together with any adjustments to the project timetable and fees payable as a result of such change. National Environmental (Permitting and Licensing System) Regulations, SI No. In 2019, the Ministry of Works and Housing set aside a total sum of 19.8 billion naira ($55 million) for the construction of 2,383 units of housing across the 36 states of Nigeria under the National Housing Program. However, Nigeria currently builds just 2,000 houses per year. 1 Percent of General Construction Total General Construction Estimate = $50,000,000 25% of Total General Construction = MEP Portion of the Construction = $12,500,000 MEP Design Fee: as Percentage of the MEP Construction (4%): Design Fee = $12,500,000 x 4% = $500,000 as Percentage of General Construction (25% x 4% = 1%): Professional bodies are formed as an association of professionals which enhance, control, and regulate the activities of its members. NAIJA LIGHT Solar Electrification Program. The fact that the employer has given their consent to the delegation of some of the main contractor's obligations to a subcontractor does not, therefore, give rise to any contractual relationship between the employer and the subcontractor and there is no privity of contract between the employer and subcontractor. 11, 2011. Advised Daniel Power Plants Company Nigeria Ltd and a consortium on the acquisition of an 80% equity stake in Ogorode Power Generation Company Ltd in Delta State, Nigeria. It is common for the funder to enter into a direct agreement with project sponsor/company and the contractor that will provide the funders with step-in rights to terminate the project contract with the contractor and appoint a replacement contractor. Typically, they are based on the FIDIC Silver Book. The procurement legislation in Nigeria are set out in the Public Procurement Act 2007 (PPA) (including the Public Procurement (Goods and Works) Regulations 2007 and the Public Procurement (Consultancy Services) Regulations 2007 made under the PPA) and the Infrastructure Concession Regulatory Commission Act, 2005 (ICRC Act). In relation to construction professionals, each profession usually has a scale of professional fees which is applied to calculate the fees payable to the professional for the services provided on the project. Other sector specific laws on PPP includes the Electric Power Sector Reforms Act 2005 for the electricity sector; and the Federal Highways Act Cap F13 LFN 2004 for the transport sector. Various states in Nigeria have also passed laws regulating PPP projects in their states. ICLG - Construction & Engineering Laws and Regulations - Nigeria Chapter covers common issues in construction & engineering laws and regulations including making construction projects, supervising construction contracts, and dispute resolution. WebConstruction projects are generally not exempt from VAT, and are liable to VAT at 7.5%. The preferred developer is selected through an open competitive bidding process in compliance with the PPA. The main tax issues which arise on projects include whether there will be value added tax, the applicable rate of stamp duty on the transaction document(s), and transfer taxes in relation to land or other property. In February 2021, at commissioning of a 1.12 MW Captive Solar Hybrid Power Plant at the Abubakar Tafawa Balewa University, Bauchi which was executed under the Energizing Education Programme (EEP), the FGN stated that Nigeria intends to have 30% of its electricity supply from renewables by the year 2030. This paper concerns an investigation into the causes of high costs of construction in Nigeria. On 16 August 2021, the President signed the long awaited Petroleum Industry Bill into law. Withholding tax is an advance tax deducted at source and payable by the payer but the ultimate tax liability is for account of the recipient. In some cases, payment is based on the terms agreed between the parties and an advance payment may be made to the contractor subject to the contractor issuing an advance payment bond or guarantee. f) PSGS 6: Letting/Real Estate Brokerage/Agency. The modes of appointment of construction professionals in Nigeria vary between the public sector and the private sector. Provided support to the commercial law development program of the United States Department of Commerce in workshops leading to the publication of the book titled. Representations and warranties (the breach of which could trigger an event of default). In addition, if the sponsors are executing a project for a government entity this may require the sponsors to adopt a selection process that complies with the PPA. Advised New Electricity Development Company Ltd on the acquisition of Ikeja Electricity Distribution PLC. In this revision, the starting band was increased from N250,000.00 to N5 Million. Professional Bodies in Nigerian Construction Industry. The Labour Act provides that normal work hours are to be fixed by mutual agreement, collective bargaining, or by an industrial wages board. In Nigeria, force majeure events are commonly classified into the following three categories: It is not enough for a party to allege that its inability to perform a contract is as a result of circumstances beyond its control. Construction professionals will usually seek to place a cap on their liability. The Harmful Wastes Act criminalises the unlawful carriage, deposit or possession of harmful waste in Nigeria, its territorial waters or exclusive economic zones. The USD11.17 billion Lagos-Calabar coastal standard-gauge line was approved by the Federal Executive Council in August 2021. It is not unusual for contractors to exclude liability for indirect and consequential loss, except for specific items carved out in the contract. Deep-sea port with a railway project connecting Calabar with Port Harcourt and Onne Deep Sea Port. Recent projects, including those listed below are all being developed through PPPs. 1 Percent of General Construction Total General Construction Estimate = $50,000,000 25% of Total General Construction = MEP Portion of the Construction = $12,500,000 MEP Design Fee: as Percentage of the MEP Construction (4%): Design Fee = $12,500,000 x 4% = $500,000 as Percentage of General Construction (25% x 4% = 1%): To be excused from performing its obligations whilst the force majeure event lasts, the party seeking to rely on the force majeure provision would typically be required to comply with additional contractual requirements to the satisfaction of the other party, including reporting and damage mitigation requirements. The entitlement of consultants to recovery from third parties in respect of additional costs or delays depends on the terms of their contracts and appointments. The FGN is taking steps towards reducing the infrastructure deficit through increased spending as part of a 30-year infrastructure plan (National Integrated Infrastructure Master Plan) (Infrastructure Plan) with a target date of 2043, which aims to bring Nigeria's infrastructure stock to the GDP level recommended by the World Bank. The project is currently at the pre-engineering state which is estimated to be completed in 10 months. Typically, contractors are allocated all the following risks: Risk of compliance with applicable law and regulation. Controversy is sprouting again among building sector professionals on the scale of fees being charged in the industry. Both equity and debt financing will typically be used in the same project usually at a ratio of 70% debt to 30% equity. Draft EIA to be carried out and a report submitted to the DRP at the end of the project conceptual design and will form the basis for approval by the DPR of the detailed engineering design. Builders must be licensed by the Nigerian Institute of Building. The repayment of the loan is structured in accordance with a repayment schedule by way of amortisation, or very rarely, a bullet repayment. From the table above, an architect commissioned to undertake a project with an estimated total cost (ETC) of N 18,200,500 will be entitled to a professional fee of N823,521.25 Nevertheless, the proportion of the above total fee payable to the architect is determined by the amount of work done. Advising a leading Nigerian broadband communication solution integrator on the financing of fibre optic cables and the restructuring of existing debt; Advising IFC in connection with the proposed facilities of up to USD325 million to a liquefied natural gas company in Nigeria. The outline business case contains information on the proposed structure of the project, the procurement process for awarding the contract as well as the resources to be used in implementing the project. Rivers State Public-Public Participation in Infrastructure Development Law 2009. Final EIA to be prepared and approval obtained at the end of detailed engineering design but before the commencement of any construction activities. Member of the team that advised Consolidated Infrastructure Group Ltd. on due diligence and project structuring for its investment in the development of an 8.5 MW dual fuel power project in Delta State. N60m (estimated project cost) multiplied by a minimum of 7.5% (scale of fees for new projects). There are 3 stages of payment. Section 46 of BOFIA prescribes a penalty of up to five years imprisonment and fine of NGN5,000,000 or both for an employee or officer of a bank who asks for or receives or agrees to receive any gift, money, property or thing of value for their personal benefit, for procuring or trying to procure for any person, any advances, loans or credit facility from the bank, or any other service rendered in line with their duty as an employee of the bank. In most contracts for the construction of process plants, liability is usually capped at 25% of the contract price. The interest payment on a loan to fund a construction project is an allowable deduction before arriving at the taxable profits. The collapse in oil prices and the pandemic plunged the country into recession in 2020. Section 15(1) of the MLPA prescribes a penalty of ten years imprisonment for any person found guilty of converting or transferring resources or properties derived directly from bribery and corruption with the aim of either concealing or disguising the illicit origin of the resources or property or aiding any person involved to evade the illegal consequences of their action. Implementing clear policies that promote and encourage investor confidence in the sector. In addition, the NMWA does not apply to establishments that employ less than 25 persons, or in which people are employed on a part-time or piece-rate basis. Time or Duration Based Fees CHAPTER FIVE: Adjustment of Fees 5.1. The Lagos-Ibadan Standard Gauge rail began commercial operations in 2021. byNicholas Okafor, Adeola Sunmola, Victor Samuel and Chisom Okolie, Udo Udoma and Belo-Osagie. Basis of Professional Charges for Consulting Services 4.3. Collaborated with the commercial law development programme of the US Department of Commerce in workshops leading to the publication of the book titled. Introduced policies aimed at improving rural electrification through the Rural Electrification Strategy and Implementation Plan (RESIP), under which the Board of the Rural Electrification Agency (REA) Board was constituted. WebConstruction projects are generally not exempt from VAT, and are liable to VAT at 7.5%. Recently-commissioned Abuja light rail, the first (rapid transit) light rail project in Nigeria. Nigeria is signed up to the Paris Agreement which was ratified agreement in 2017. Ibom Deep Seaport project, which is nearing realisation, following the opening of the bid process in Lagos which was won by Bollore Africa in November 2018. In February 2021, the World Bank Group approved USD500 million support for the FGN for improving the electricity distribution sector and boosting access by improving the performance of Electricity Distribution Companies (DISCOs) through a large-scale metering programme. Alu - February 25, 2022. Contractual protections such as payment bonds and guarantees, including the obligation to issue a standby letter of credit, are more commonly used by contractors to secure payment. The General Conditions of Contract for the procurement of works 2011. This is broken down into. The railway is currently being extended to the Lagos Port to ease import and export of goods. Fixed and floating charges over all the project company's assets and receivables, bank accounts. The client has the right to suspend payments to the contractor by issuing a pay less notice ,if this can be done, within the prescribed timeframe under the contract. Other debt funding arrangements include overdraft facility, revolving credit facility, debt capital markets and letters of credit. There are rules in Nigeria that prohibit corrupt business practices and bribery generally. WebCONSULTANCY AGREEMENT & PROFESSIONAL FEES SCHEDULE ARCHITECTURAL CONSULTANCY AGREEMENT 7 In the event that the Architect is required to process the application, the Client shall pay the Architect an additional fee based on a time charge as per Schedule 4.11 and expenses based on cost plus 10% in respect of the processing of such It is common for a tender process to be carried out or for qualified professionals to be invited to submit bids or proposals in relation to private projects. The funders may decide to call for the performance bond or take out the parent company guarantee provided by the contractor where such exists. Table of Professional Charges 4.5. ICLG - Construction & Engineering Laws and Regulations - Nigeria Chapter covers common issues in construction & engineering laws and regulations including making construction projects, supervising construction contracts, and dispute resolution. In this revision, the starting band was increased from N250,000.00 to N5 Million. Advance Fee Fraud and Other Related Offences Act 2006. Fee proposed is 10% of Gross Rent Payable, or Gross Proceeds of Sale/Purchase. In subcontracts for the provision of services that are vital to completion of a construction project, it is not uncommon for a contractor to require the inclusion of the "pay-when-paid" clause. For example, in Lagos State, the transfer fees payable on a transfer of land total 3% of the assessed fair market value of the property. The performance bond or take out the parent company guarantee provided by the contractor 's liability in specific of. Allocated all the following risks: Risk of compliance with the commercial Development. 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