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News - October 13, 2022

MTN to Execute N203bn Enugu-Onitsha Road: A Look at this Emerging Trend

MTN is set to begin the reconstruction of the Enugu-Onitsha road. This was following the approval of the takeover of the N203 billion construction of the dilapidated South-East road under the Road Infrastructure Tax Credit Scheme (RITC) by the Federal Executive Council (FEC).

Babatunde Fashola, the Minister of Works and Housing, announced it after the FEC meeting at the presidential villa with President Mohammadu Buhari.

He said, “The Ministry of Works and Housing presented two memoranda, mainly PPP-based memoranda. On January 25, 2019, President Buhari specifically approved Executive Order 7, the road infrastructure tax credit scheme, to allow the private sector to invest tax liabilities in advance in infrastructure.

That policy has helped us to finance roads such as Obajana to Kaba, Apapa-Oshodi, Oshoki-Ojota Expressway, and the Bodo-Bonni expressway in Port Harcourt, about 1000 kilometres covering 21 roads under the NNPC investment. So, there is an increased optic for that policy. Today, we have two more.

The first is MTN Nigeria Plc, to take over and complete the ongoing Enugu-Onitsha Expressway. That road is 110 kilometres, which is being dualised. So, you have 110 kilometres times two.”

2021 pledge by MTN

In 2021, MTN Nigeria, celebrating its twentieth anniversary, announced its takeover of the Enugu-Onitsha expressway construction. This was announced by Karl Toriola, the chief executive officer (CEO) of MTN Nigeria. He said, “2021 marks the 20th anniversary of MTN’s presence in Nigeria. As we celebrate this milestone, we are pleased to announce that our Board of Directors has approved our participation in the Road Infrastructure Tax Credit (RITC) Scheme.

This is in response to the government’s drive towards public-private partnerships to rehabilitate critical road infrastructure in Nigeria. We intend to participate in the restoration and refurbishment of the Enugu-Onitsha Expressway. Conversations in this regard have already commenced, and further announcements will be made in due course.”

After proper discussions and following Executive Order 7, signed by President Mohammadu Buhari in 2019, approval was given to MTN to take over the Enugu-Onitsha expressway reconstruction.

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The game-changer scheme

The signing of the Infrastructure Tax Credit Scheme (RITC) in 2019 by President Mohammadu Buhari, to an extent, has promoted the collaboration between the federal government and private organisations. This has translated to refurbishing some of Nigeria’s dilapidated roads.

The president approved these roads under Executive Order No 007 of the RITC scheme in exchange for the tax credit.

Apart from the MTN Enugu -Onitsha road that was approved, the president also approved other road constructions for private companies based on the recommendation of the Minister of Finance. For instance, the Umuchi-Ususu-Umueme road is to be done by GZ Industries in Abia for N4.2 billion.

Other road schemes include the Apapa-Oworonshoki-Ojota Road by Dangote Industries and the Lokoja-Obajana-Kabba road by Dangote Cement Plc. Dangote Cement received a tax credit of about N22.3 billion for the two roads.

Despite its effectiveness, this has begged the question of how effective it is.

Pros and cons of the scheme

While the scheme is good, it is not bulletproof. One of its upsides is redirecting tax into public infrastructures for restructuring bad roads. This has seen the repairing of roads long forgotten. This reduced the Nigerian system’s mismanagement of public funds if taxes were paid to the federal government.

In the area of cons, one of such things to consider is how true it is that N203 billion and N4.2 billion will be used by MTN and GZ industries, respectively, to construct the Enugu-Onitsha road and the Umuchi-Ususu-Umueme road. 

How certain are we that the Dangote group used N22.3 billion to reconstruct the  Apapa-Oworonshoki-Ojota Road and the Lokoja-Obajana-Kabba road and not lesser than that?

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