The Federal Government has forgone $577.6m in tax revenue under the Road Infrastructure Tax Credit Scheme to the Nigerian National Petroleum Company Limited from February to December 2024.
The FAAC Post-Mortem Report for February 2025 obtained by Sunday PUNCH revealed that $52.5m was deducted monthly from the FIRS JV Gas Company Income Tax, bringing the total deductions to $577,604,432.08 by December 2024.
According to the report, the deductions remained consistent throughout the period, with the cumulative balance rising from $52.5m in February to $105m in March, $262.5m in June, $420m in September, and $577.6m by the end of December.
The scheme, introduced under Executive Order 007 of 2019, allows private companies to finance road projects in exchange for tax credits, reducing the government’s direct financial burden.
A representative of NNPCL told FAAC that discussions with the Federal Ministry of Finance were ongoing to finalise implementation details.
The company said it was engaging with senior officials to ensure clarity on the scheme’s operation.
The report read, “On the issue of Road Infrastructure Tax Credit Scheme, NNPCL representative informed the meeting that the management of the company is engaging with the Federal Ministry of Finance at the top level. He also said that discussion is ongoing and hopes to report the outcome of the engagement.
“As of December 2024, the sum of $52,509,484.28 was deducted, bringing the total amount to $577,604,432.08.”
The tax credit programme has been key to funding major road projects without immediate government expenditure.
However, concerns remain over the long-term impact of such revenue forfeitures, especially as the country faces economic pressures.
At its August 2024 meeting, FAAC members called for a suspension of the deductions, emphasising that the responsibility of road construction lies with the Federal Government.
Also, at the FAAC Plenary meeting held in Bauchi, NNPCL was requested to suspend further deduction pending when the contentious issue surrounding the scheme is resolved.
They argued that their share of the deduction should be calculated based on the existing Revenue Allocation Sharing Formula and refunded accordingly.
To address the concerns, the Chairman of the Revenue Mobilisation Allocation and Fiscal Commission formally requested detailed information from the FIRS on the tax credits granted to NNPCL and other organisations involved in the scheme.
A report on the request noted, “The Sub-National position was that it is the responsibility of the Federal Government to construct roads; hence, the share of the Sub-National should be computed based on the existing Revenue Allocation Sharing Formulae and refunded to them.
“To resolve the issue, the Chairman of the Commission wrote to the Management of FIRS requesting the detailed Tax Credit granted to NNPC Ltd and other organisations. The Sub-Committee awaits FIRS’s response.”
The Road Infrastructure Tax Credit Scheme enables companies with high tax profiles to construct roads in a negotiated agreement with the Federal Government to provide the infrastructure instead of taxes.
The scheme was used as pilot funding for the completion of the 32-kilometre Apapa-Oshodi-Oworonshoki-Ojota expressway.
In 2023, the government approved N1.535tn under Phase 2 of the NNPCL tax credit scheme.
This was after the national oil company announced that it would spend N1.9tn in the second phase of the tax credit scheme for infrastructure development.(Punch)
