Federal Executive Council (FEC) yesterday approved the proposal for one of Aliko Dangote’s subsidiary companies(the Construction company), to construct Lokoja-Obajana-Ilorin road. Dangote industry will get 30 per cent income tax cut in exchange.
Minister Fashola clarifies the tax incentives Memo presented to FEC today:
This is not a Dangote-only issue. There’s an existing tax policy that states that any individual or corporate entity that makes PRE-APPROVED investments in public-owned infrastructure is entitle to make claims on remission of INCOME TAX obligations.
So this is not a Dangote-targeted policy, it’s an economy-targeted policy.
Anyone can take advantage of this provision. It’s like a credit advance to the government, the road or infrastructure ultimately belongs to the government.
It was made known after Council approved Memo for Dangote subsidiary to fund and build Obajana-Kabba road using cement, in exchange for tax incentives.
The Obajana factory of Dangote Cement is situated along this route.
“So we presented a proposal by one of the subsidiary of Dangote Group, a construction company, for the construction of a section of Lokoja-Obajana-Kabba-Ilorin,specifically the section between Obajana-Kabba Road using cement as demonstrative of how perhaps we should continue to build going forward in order to reduce maintenance on the road and the company proposing to fund the construction of that section of the road in exchange for some tax remissions.”
“Companies are ordinarily supposed to pay income tax, there are existing policies in our laws which enable government to consider and give tax incentives.”, Fashola stated.
It is a known fact that cement is a better paving material for heavy duty/large truck roads than asphalt, as a result this concession will save the government billions of construction and maintenance naira, while reducing operating cost for the industries on that axis.
“So FEC considered and approved the proposal for Dangote Construction Company to build that section of the road because the tonnage of cement being produced from the factory has increased and the traffic in that area has increased, there has been unfortunate accidents there too.” Fashola stated.
“So it is a total economic policy which Council considered and approved because it gives support to industry; it enables us take benefit of our tax law to renew infrastructure at a time where we are really challenged for resources to finance all our roads. It also enables us to save lives by quickly and urgently rebuilding that road so that other commuters who also depend on the road for their livelihood would also benefit from the road.”