However, Nigeria currently builds just 2,000 houses per year. The Constitution also creates the Federal High Court with jurisdiction over specific subject matter. Economic loss can be excluded but, in some cases, the counter party may require certain aspects of the economic loss to be mitigated through performance guarantees, although these may specify a maximum amount recoverable from the contractor in the form of liquidated damages. The obligations under the EGASPIN are in addition to any other environmental compliance requirement set out under any other law. Types of Professional Fees 4.2. WebLowe (2003) further stated that the value added of construction is in the range of 7% to 10% for highly developed economies and around 3% to 6% for underdeveloped economies. Arbitration is either ad hoc or institutional. The common contract forms used for local projects are: The Standard Bidding and Contract Documents produced by the Bureau of Public Enterprises (for public procurement works). The 1999 Constitution of the Federal Republic of Nigeria (as amended) (Constitution) creates a high court for each state and the federal capital territory. The project owner typically takes the following risks: Risk of ground conditions, including any archaeological discoveries or ionisation and contamination of the soil. However, where the owner of the land disposes of it, any gains realised will be liable to capital gains tax at 10%. This paper concerns an investigation into the causes of high costs of construction in Nigeria. State governments have also embarked on projects aimed at providing affordable housing for citizens. In many cases, the project company is a joint venture entity between a local sponsor and a foreign entity that will provide technical or management services to the project. 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. The PPA contains detailed provisions in respect of the procurement process, including the principles, planning, implementation and general conduct of public procurement. f) PSGS 6: Letting/Real Estate Brokerage/Agency. Other debt funding arrangements include overdraft facility, revolving credit facility, debt capital markets and letters of credit. The two major funding models for local and international projects in Nigeria are: Equity, including mezzanine finance. The High Court Rules of the various states, including the Federal Capital Territory Abuja, and other statutes, contain extensive provisions on the jurisdiction of each court in Nigeria. Types of Professional Fees 4.2. 19, 2009. In 2020, the FGN issued a NGN162.5 billion (about USD393.4 million). Some engineering, procurement and construction contracts for local projects are also drafted on the basis of the template developed by the International Federation of Consulting Engineers (. Construction contracts typically include caps on liability. Time or Duration Based Fees CHAPTER FIVE: Adjustment of Fees 5.1. 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. The Lagos-Ibadan Standard Gauge rail began commercial operations in 2021. National Environmental (Electrical/Electronic Sector) Regulations, SI No. 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. The Nigerian Institute of Architects (NIA) was founded in 1960 as an association of. The most heavily negotiated provisions are those relating to the contractor's liability in specific events of default. 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. Act (. Advised Kepco Energy Resources Ltd on the financing of its acquisition of Egbin Power PLC. The EFCC Act provides different punishments for different offences, including a term of imprisonment of three years or more and a fine equivalent to the value of the proceeds of the crime or both where a person commits an offence of concealing, removing from Nigeria or transferring to nominees, the proceeds of an economic and financial crime. However, if the Nigerian national is an engineer, engineering technologist, engineering technician, engineering craftsperson, or builder, they must register with either the Council for the Regulation of Engineering in Nigeria (COREN) or the Builders Council under the Builders Registration Act (. Some of the penalties under Nigerian anti-corruption laws include the following: The Corrupt Practices Act prescribes a penalty of seven years imprisonment for any person who, being a public official: corruptly asks for, receives or attempts to receive or obtains any property or benefit of any kind before or after doing or omitting to do something in an official capacity; gives, confers or procures, or promises or offers to give, confer, procure or attempt to procure, any property or benefit of any kind to or for a public officer, or any other person on account of any act performed in an official capacity. Fee proposed 10% of Gross Rent Payable. Professional Bodies in Nigerian Construction Industry. Banks and Other Financial Institutions Act 2020 (BOFIA), Failed Banks (Recovery of Debts) and Financial Malpractices in Banks Act (. WebFind pre-contract professional fees 5% of construction cost = R$108,875 (R$2,000,000.00 to R$4,000,000.00 Range) Contract Value/Building Gross Floor Area = 2,177,500.00/347m2 = R$6275.22 per m2 Pre-contract professional fees 5% of R$6275.22 = R$313.76 per m2 of gross floor area Stage A 7.5% of R$313.76 = R$23.53 per m2 Guidelines for the Development of Local Content in the Nigerian Electricity Supply Industry. Construction & Engineering Laws and Regulations Nigeria 2022-2023. The two pieces of primary legislation that govern environmental issues in Nigeria are the: Environmental Impact Assessment Act (EIA Act). In addition to local Nigerian laws, some foreign anti-corruption and anti-bribery laws have extra-territorial effect and may apply to certain categories of persons in relation to actions that are connected with Nigeria. In some instances, there could be a combination of more than one funding arrangement, for instance, a term loan facility and a revolving credit facility being provided under a single financing arrangement to a project. Fee proposed is 10% of Gross Rent Payable, or Gross Proceeds of Sale/Purchase. Cost is a vital element in every development. National Environmental (Standards for Telecommunications and Broadcast Facilities) Regulations, SI No. The relationships between employers, contractors and subcontractors are typically governed by ordinary principles of contract law. 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. The obligations imposed on the contractor or construction professional will depend largely on the parties to the contract. Fixed and floating charges over all the project company's assets and receivables, bank accounts. 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! Fee proposed 10% of cost of Annual Services. In June 2020, the FGN approved a USD120 million continued construction and completion of the Kashimbila multipurpose dam in Taraba State, which is expected to generate 40 MW of electricity and water for the community. There are various mechanisms available to Nigerian companies for mitigating taxes, depending on the nature of the transaction and the project. In January 2021, the FGN signed a Memorandum of Understanding with a Portuguese construction firm Mota-Engil for the construction of the cross-border Kano-Maradi rail line which has an estimated construction cost of USD1.96 billion. The EFCC Act defines economic and financial crimes as non-violent criminal and illicit activity committed with the objective of earning wealth illegally, either individually or in a group or organised manner and includes any form of fraud, narcotic drug trafficking, money-laundering, embezzlement, bribery, looting and any form of corrupt malpractice, illegal arms deal, smuggling, human trafficking and child labour, illegal oil bunkering and illegal mining, tax evasion, foreign exchange malpractices including counterfeiting of currency, theft of intellectual property and piracy, open market abuse, dumping of toxic wastes and prohibited goods, among others. Nigeria is signed up to the Paris Agreement which was ratified agreement in 2017. Where an instrument is executed outside Nigeria, stamp duty must be paid within 30 days from the date on which the instrument is first brought into Nigeria. The private sector has also shown an increased appetite for investment in real estate. Currently leading the team advising a US company in connection with the development of a 30MW Coal fired power plant in Nigeria. Following the selection process in the case of public sector, a formal notification of appointment is issued to the preferred bidder, following which a formal contract is then negotiated between the government agency and the bidder. Risks associated with fitness are mitigated through performance guarantees from the contractors. A special purpose vehicle used to execute the project will be liable to pay: 30% of its total profit (less any allowable deductions and capital allowances) if it has more than NGN100,000,000 turnover; 20% if it has a turnover between NGN25,000,000 and NGN100,000,000; or. 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. Engage in direct procurement in cases of emergency. An alternative is to include a direct payment clause which allows for the employer to step in and pay the subcontractor directly where the contractor fails or is unable to make payments. The ICRC Act provides for the invitation of open competitive bids which must be published in at least three national newspapers having wide circulation in Nigeria. The insurance must have a value that is at least three times the total annual emoluments of all the employees. In July 2012, the Central Bank of Nigeria issued the Sustainable Banking Principles under which banks and other financial institutions undertook to integrate environmental and social considerations into business decision making. Webprofessionals in the Built Industry to develop an harmonised scale of fees. Federal Ministry of Works Contract (variant of the JCT). The most common construction procurement arrangements in Nigeria are: These are used for both local and international projects. WebLowe (2003) further stated that the value added of construction is in the range of 7% to 10% for highly developed economies and around 3% to 6% for underdeveloped economies. In addition, parties can execute a direct agreement with the third party which will contain terms such as step-in rights provisions to enable the third party step in and assume the obligations and rights of the project sponsor under the contract where a certain agreed event occurs. 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. Alu - February 25, 2022. 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. 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. Advised Accugas Ltd on a USD445 million refinancing of facilities for the construction of a gas processing facility and the acquisition of a 100% stake in East Horizon Gas Company Ltd. Withholding tax of 10% on any dividend paid (unless it has a tax exemption), although if the recipient of the dividend is located in a country with which Nigeria has a double tax treaty, the rate would be reduced to 7.5%. This was submitted by the Association of Consulting Engineers in Nigeria and the Nigerian Society of Engineers to the Council for the Regulation of Engineering in Data provided by the National Bureau of Statistics (NBS) shows that the construction sector grew by only 1.42% in Q1 2021 from 1.21% in Q4 2020. Fee proposed 10% of Gross Rent Payable. 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