Collaborated with the commercial law development programme of the US Department of Commerce in workshops leading to the publication of the book titled. Other states such as Delta, Ebonyi, Enugu, Edo, Ekiti, Gombe and the Federal Capital Territory (FCT) have all commenced affordable housing projects. In 2020, the FGN issued a NGN162.5 billion (about USD393.4 million). e) PSGS 5: Facility Management. 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. Fee proposed 10% of cost of Annual Services. d) PSGS 4: Property Management. N60m (estimated project cost) multiplied by a minimum of 7.5% (scale of fees for new projects). 0. The Federal Government of Nigeria (FGN) is committed to growing the infrastructure industry including modernising and expanding the existing power production capacities in the country, both on-grid and off-grid. Basis of Professional Charges for Consulting Services 4.3. 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 WebConstruction projects are generally not exempt from VAT, and are liable to VAT at 7.5%. Standard forms of contracts prepared by the Joint Contract Tribunal (JCT). 0. This is broken down into. Parties to construction contracts in Nigeria typically negotiate their contracts on the basis of a draft prepared by their advisers including lawyers. The EGASPIN provides for the following processes: Environmental screening to be carried out during concept selection studies. Key member of the team that advised Stanbic IBTC Bank PLC, as Lender's counsel, with respect to an USD11.3 million medium term loan facility advanced for the refinancing of a residential real estate development in Durunmi, Abuja. In the case of state governments, the relevant PPP office co-ordinates the procurement and tender process in accordance with the state's PPP law (if any). 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. 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. The working hours of all other employees are governed by their respective contracts of employment. The repayment of the loan is structured in accordance with a repayment schedule by way of amortisation, or very rarely, a bullet repayment. The CC Act also prescribes the same penalty in relation to similar offences as those immediately above. Time or Duration Based Fees CHAPTER FIVE: Adjustment of Fees 5.1. The project company usually has no assets other than the project and will be the borrower under the financing agreements and a party to the project agreements. Implementing clear policies that promote and encourage investor confidence in the sector. The most common forms of dispute resolution in Nigeria are litigation and arbitration. However, these are still subject to performance risks. Where the assets to be used in a construction project are liable to VAT, the purchaser must pay VAT on the consideration payable for such assets at the rate of 7.5%. 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. The rates payable will depend on which of Nigeria's 36 states the real property is located in. This Scale was used for the next 14 years until 1992 when it was revised. There are no specific laws in the Nigerian construction industry that give a contractor the right to maintain a lien on the employer's property or over the project where there is a payment default. Although a subcontract is derived from the main contract, it is a stand-alone contract creating contractual rights and obligations strictly between the parties to it. London Court of International Arbitration Rules. In the few cases where contracts involving Nigerian parties provide for institutional arbitration, the parties tend to choose local Nigerian arbitration institutions such as the Chartered Institute of Arbitrators (UK) Nigerian Branch or the Lagos Regional Centre for International Commercial Arbitration. Despite the impact of the pandemic that led to a significant decline of construction activities, the industry was forecast to be one of the lead drivers of the Nigerian economy in 2021. The standard document for PPP is a concession agreement which is executed between the relevant government agency and the private sector participant. Under Nigerian law, exclusion of liability is typically achieved through limitation of liability clauses. byNicholas Okafor, Adeola Sunmola, Victor Samuel and Chisom Okolie, Udo Udoma and Belo-Osagie. WebFee is to be negotiated subject to a minimum of N50,000=. 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%): This is, however, a contractual right and can only be exercised if it is included in the project document. (. The Labour Act provides that normal work hours are to be fixed by mutual agreement, collective bargaining, or by an industrial wages board. Fee proposed is 10% of Gross Rent Payable, or Gross Proceeds of Sale/Purchase. Alu - February 25, 2022. Fixed and floating charges over all the project company's assets and receivables, bank accounts. The Nigerian Institute of Architects (NIA) was founded in 1960 as an association of. The project contract usually contains provisions that require payment to be made for the demobilisation and repatriation of foreign personnel to their home countries. For both local and international projects, a syndicate of lenders typically provide the debt financing but some local projects are funded on a bilateral basis. All procuring entities, including MDAs are required to obtain a Certificate of No Objection to Contract Award from the Bureau of Public Procurement before they engage in any procurement process. On the basis of the President's directive that every seaport should have complementary rail infrastructure, we expect to see more developments in this sector in other states in the medium to long term. 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. The parties through their project documents usually provide for a dispute resolution mechanism to be adopted in the event of dispute. Cost is a vital element in every development. In addition to these laws, various states have passed laws that regulate environmental issues in their state. Corporate guarantee from the sponsors (and sponsors' parent companies in 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. Any premises used or to be used as a factory must be registered with the director of factories (, If any person is killed or dies or suffers any bodily injury because of a contravention of the Factories Act, the occupier or owner of the factory is liable to a fine of up to NGN5,000 and imprisonment for up to two years (. 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. NAIJA LIGHT Solar Electrification Program. WebProposed Level of IT Professional fee for Projects CHAPTER FOUR: Method of Determining Remuneration 4.1. One which promotes competition, economy and efficiency. There are 3 stages of payment. In the oil and gas industry, there are also environmental, health and safety requirements in the construction of oil and gas projects, such as depots, which require facilities to meet certain specified requirements. There is no limit to the number of hours an employee can work in a day. Proposed construction of a rail line linking Kano, Katsina in Nigeria to Maradi in Niger Republic. If passed, the proposed legislation will establish a framework for Nigerian professionals to be given preference in the implementation of construction projects in Nigeria. 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 Final EIA to be prepared and approval obtained at the end of detailed engineering design but before the commencement of any construction activities. The provisions that commonly govern contract variations are those that regulate issuing change orders or additional work. Deep-sea port with a railway project connecting Calabar with Port Harcourt and Onne Deep Sea Port. WebFee is to be negotiated subject to a minimum of N50,000=. The interest payment on a loan to fund a construction project is an allowable deduction before arriving at the taxable profits. However, engineering, procurement and construction contracts typically include a payment schedule. Other sanctions imposed under the EFCC Act include the forfeiture of assets (both within and outside Nigeria) and the freezing of bank accounts maintained by a person accused of the commission of a financial crime. The slow implementation of government budgets, however, has been a perennial problem in Nigeria. Act (. The most heavily negotiated provisions are those relating to the contractor's liability in specific events of default. 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. Under Nigerian Law, certain professionals must have obtained the relevant licences to engage in construction projects: Engineers must be licensed by the Council for the Regulation of Engineering in Nigeria (COREN) under the Engineers (Registration, etc) Act) (, Quantity surveyors must be licensed by the Quantity Surveyors Registration Board of Nigeria under the Quantity Surveyors (Registration, etc.) Alu - February 25, 2022. The EIA Act specifies different types of projects in respect of which a mandatory study must be conducted. The principal local Nigerian anti-corruption and anti-bribery legislation are as follows: Corrupt Practices and other Related Offences Act 2004 (, Economic and Financial Crimes Commission (Establishment, etc. It is usual for parties to agree a period beyond which the contract will be terminated on account of the subsistence of a force majeure event. However, there are other transfer fees and taxes payable on the transfer of real property. There is currently a bill at the Nigerian National Assembly in connection with the development of local expertise and capacity in the Nigerian construction industry. Currently advising the project sponsors in connection with the 500 MW independent Gas Power Project proposed to be constructed by Oma Power Generation Limited in Abia State, Nigeria. Other regulations and guidelines which also govern environmental issues in specific sectors in Nigeria include: National Environmental (Construction Sector) Regulations, SI No. e) PSGS 5: Facility Management. Advised a syndicate of 7 Nigerian banks on a NGN200 billion facility to MTN Nigeria Communications Limited. Some projects are procured as wrapped-around engineering, procurement and construction projects. 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. 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. The structures explained above also apply to international projects. Assignment of rights in the project documents, insurance policies, hedging arrangements, future and present undertaking, and so on. Construction & Engineering Laws and Regulations Nigeria 2022-2023. Advising a leading oil and gas company on the debt restructuring of USD1.83 billion Senior Secured Medium-Term Acquisition Facility provided to the company by a syndicate of onshore and offshore lenders. WebThis 1978 document had the architects fee starting at 4.5% for a project of N250,000.00 and sliding thereafter. Member of the team that advised Falcon Kinetics Limited on the Construction of the Civil and Structural Works for the development of a 4,000MT LPG Bulk Gas Storage Facility and Jetty Project at Rumuolumeni, Saipem/Aker Base Road, Port Harcourt, Rivers State, Nigeria. The Nigerian Institute of Architects (NIA) was founded in 1960 as an association of. The Constitution also creates the Federal High Court with jurisdiction over specific subject matter. Types of Professional Fees 4.2. 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 Advised Actis on its investment in the 459 MW Azura-Edo gas fired independent power plant in Edo State. Most construction contracts contain step-in right provisions that impose an obligation on the contractor to assign the subcontract to the employer in certain circumstances, for example, if the main contract is terminated. In addition to the EIA Act, the Environmental Guidelines and Standards for the Petroleum Industry in Nigeria (EGASPIN), which apply specifically to the oil and gas industry, requires an EIA to be carried out when constructing certain oil and gas facilities, including oil and gas pipelines, crude oil production facilities, tank farms, hydrocarbon processing facilities, product depots, waste treatment/disposal facilities and so on. The contractual provisions that govern or limit liability include provisions dealing with any of the following: Indemnities on account of losses caused by delay. Some of the arbitration rules that can be adopted by the parties to govern their arbitration proceedings include the: Arbitration and Conciliation Act, Cap A18, Law of the Federation of Nigeria 2004 (ACA). 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. A foreign contractor that will be executing a project in Nigeria must incorporate a local subsidiary in Nigeria through which it will implement and carry out the construction contract (. Fee proposed 10% of cost of Annual Services. The scope of such caps is usually fixed by commercial terms with the relevant acceptable exclusions, which may be extended beyond the norm, based primarily on the risk allocation mechanism of the project. Subsequent payments are then made on the achievement of agreed milestones and the completion of the project. This Scale was used for the next 14 years until 1992 when it was revised. Nigeria is a federation comprised of 36 states and the federal capital territory, Abuja. The most common form of debt financing in Nigeria is a term loan facility which is a committed loan facility, under which the project company is allowed to request a lump sum of capital from the funders (usually in tranches) within an agreed period. Where the FEC is satisfied that the project should be carried out using a PPP, it grants its approval to the project. Some contracts also include provisions permitting the contractor to initiate a change proposal where the contractor considers that: A request by the client will have a technical or financial impact on the project. 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. 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 entitlement of consultants to recovery from third parties in respect of additional costs or delays depends on the terms of their contracts and appointments. Recent projects include the: 67.32KW Solar Hybrid Mini Grid at Oloibiri, Bayelsa State; 234KW solar hybrid mini grid power plant in Shimankar Community, Shendam Local Government. Table of Professional Charges 4.5. e) PSGS 5: Facility Management. The project owner typically takes the following risks: Risk of ground conditions, including any archaeological discoveries or ionisation and contamination of the soil. Professional fees in building projects Structural engineering fees Rp200,000 to Rp 300,000 per square metre MEP (mechanical, electrical and plumbing) design fees Rp120,000 per square metre Quantity Surveyors fees Rp60,000 per square metre Where possible, promote positive impacts. 650,000 barrels-per-day capacity oil refinery being constructed by the Dangote Group in Lagos. The MDA sends out an invitation for bids from interested private sector developers. 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 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. This clause requires a subcontractor to be paid within a specific period after the contractor has been paid that is make payment contingent on the contractor being paid. 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. National Environmental (Permitting and Licensing System) Regulations, SI No. The NESREA Act also regulates the effect of a project on the environment. This paper concerns an investigation into the causes of high costs of construction in Nigeria. Advising a leading energy company in connection with the restructuring of loan facilities worth an aggregated USD723 million, aimed at mitigating the impact of the devaluation of the Naira on its business. Banks and Other Financial Institutions Act 2020 (BOFIA), Failed Banks (Recovery of Debts) and Financial Malpractices in Banks Act (. 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. Signed a six-year, NGN1.15 trillion (about USD3.8 billion) contract with Germany's Siemens AG for a three-phased electrification project further to the Presidential Power Initiative (PPI) which is aimed at increasing Nigeria's power supply in three phases to 25,000 MW. 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. Basis of Professional Charges for Consulting Services 4.3. The Harmful Wastes Act criminalises the unlawful carriage, deposit or possession of harmful waste in Nigeria, its territorial waters or exclusive economic zones. Launched an initiative under the REA, as part of the NESP, to roll out five million new solar-based connections in communities that are not grid connected. 2.50% Balance None of these contract forms are mandatory. 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. Federal Ministry of Works Contract (variant of the JCT). However, the following are typical significant approvals. Various states in Nigeria have also passed laws regulating PPP projects in their states. In relation to construction projects, one mechanism is funding the project company with more debt than equity and so reducing the taxable income of the special purpose vehicle. On completion, subject to the terms of the approval granted by the relevant government agency, the contractor or project company may be required to file a report on project completion. The principal feature of the EIA Act is that it specifically requires that any public or private sector project must not be undertaken or started without a determination of its environmental effects. It also contains information on the legal, financial, environmental and technical aspects of the proposed project. 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. All contractors are also required to comply with the National Building Code 2006, which sets outs the standards to be observed in the construction of different types of projects. Advised Kepco Energy Resources Ltd on the financing of its acquisition of Egbin Power PLC. Generally, a Nigerian national does not require any authorisations to work in Nigeria. The General Conditions of Contract for the procurement of works 2011. Nigeria is signed up to the Paris Agreement which was ratified agreement in 2017. In the power sector, the caps in engineering, procurement and construction contracts range between 10% and 15%. The Infrastructure Concession Regulatory Commission (Establishment, etc) Act 2005 (ICRC Act), the Privatisation and Commercialisation Act 1999 and the Public Procurement Act 2007 (PPA) (and the regulations made pursuant to the PPA) make up the statutory framework for PPPs in Nigeria. Professional bodies are formed as an association of professionals which enhance, control, and regulate the activities of its members. The two pieces of primary legislation that govern environmental issues in Nigeria are the: Environmental Impact Assessment Act (EIA Act). Construction & Engineering Laws and Regulations Nigeria 2022-2023. The funders may decide to call for the performance bond or take out the parent company guarantee provided by the contractor where such exists. Construction contracts involving only Nigerian parties tend to provide for ad hoc arbitration under the UNCITRAL Model Law on International Commercial Arbitration or the Nigerian Arbitration and Conciliation Act. The VAT Act 2004 (as amended) and the Finance Act 2020 impose VAT on the value of the consideration for the supply or purchase of goods and services in Nigeria except where those goods and services are expressly exempted from the tax. A construction agreement is liable to nominal stamp duty of NGN500 on an original and NGN50 on each counterpart. The project company or relevant contractor must also obtain a fire safety certificate from the Federal Fire Service and the relevant State Fire Service to confirm compliance with fire safety measures. 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. Fee proposed 10% of Gross Rent Payable. 23, 2011. The NESREA has primary responsibility of enforcing compliance with laws, guidelines, policies and standards on environmental matters in Nigeria, such as water quality, noise, ozone protection, air and atmospheric protection and has issued various regulations on compliance requirements. Put and call options (that is, the right of the equity financiers or sponsors to compel the government to repurchase the assets or shares of the project company in the event that the project is expropriated or faces significant local risks).
