The Factories Act also provides that where an offence is committed by a body corporate, every director, manager, secretary or other similar officer of the body corporate is guilty of that offence and liable as if they had committed that offence unless they prove that the act or omission constituting the offence took place without their consent, knowledge, connivance or neglect. 0. N60m (estimated project cost) multiplied by a minimum of 7.5% (scale of fees for new projects). Time or Duration Based Fees CHAPTER FIVE: Adjustment of Fees 5.1. Covenants, representations and warranties. 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. 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%. Cost is a vital element in every development. 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. Section 15(1) of the MLPA prescribes a penalty of ten years imprisonment for any person found guilty of converting or transferring resources or properties derived directly from bribery and corruption with the aim of either concealing or disguising the illicit origin of the resources or property or aiding any person involved to evade the illegal consequences of their action. The repayment of the loan is structured in accordance with a repayment schedule by way of amortisation, or very rarely, a bullet repayment. 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. This is broken down into. 2.50% Balance Other regulations and guidelines which also govern environmental issues in specific sectors in Nigeria include: National Environmental (Construction Sector) Regulations, SI No. The structures explained above also apply to international projects. The company would also be liable to pay other applicable taxes and to make contributions to various funds such as the industrial training fund, employee compensation fund, and pension fund. 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. In addition, if the sponsors are executing a project for a government entity this may require the sponsors to adopt a selection process that complies with the PPA. The General Conditions of Contract for the procurement of works 2011. Construction & Engineering Laws and Regulations Nigeria 2022-2023. 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. There are 3 stages of payment. Webprofessionals in the Built Industry to develop an harmonised scale of fees. The preferred developer is selected through an open competitive bidding process in compliance with the PPA. 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. 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. Percentage Fee Scales 4.4. Foreign engineering consultants and firms can only be engaged when the required services are rendered in collaboration with firms licensed to provide such engineering services in Nigeria (. Controversy is sprouting again among building sector professionals on the scale of fees being charged in the industry. Various states in Nigeria have also passed laws regulating PPP projects in their states. 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 (. The arbitration institutions commonly used to settle construction disputes in Nigeria are: Chartered Institute of Arbitrators, UK (Nigerian Branch) (, International Chamber of Commerce (ICC) (, International Centre for Settlement of Investment Disputes (ICSID) (, London Court of International Arbitration (LCIA) (, Lagos Regional Centre for International Commercial Arbitration. 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. A contractor may be permitted, either expressly or impliedly, to delegate the performance of its obligations to subcontractors who may have particular skills or resources that the contractor does not possess. Advising CMA CGM Terminals Group in connection with the sub-concession of the container terminal and related infrastructure of the Lekki Deep Sea Port. In addition, anything used for the carriage of harmful wastes and any premises or land where it was kept can be forfeited to the FGN. 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. Another right of the client is to take physical possession of and secure the site. Including provisions that require interest on delayed payments is also one of the means of ensuring that contractual payments are made promptly and diligently. Act (. The current administration has also budgeted NGN4.125 trillion (about USD9.9 billion) for capital expenditure in the 2021 Appropriation 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. National Environmental (Electrical/Electronic Sector) Regulations, SI No. There are usually no restrictions on the client's right to terminate the contract in the event of the contractor's bankruptcy or insolvency, unless otherwise stated in the contract. The modes of appointment of construction professionals in Nigeria vary between the public sector and the private sector. Any significant expansion in the construction industry will partly depend on the pace of implementation of the Nigeria Economic Sustainability Plan (NESP), the country's post-COVID economic recovery plan, and the Economic Recovery and Growth Plan for 2017-2020 (ERGP). It allows government agencies to: Request quotations or expressions of interest. 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. WebThis 1978 document had the architects fee starting at 4.5% for a project of N250,000.00 and sliding thereafter. One of the functions of the Bureau of Public Procurement is to prepare and update standard bidding and contract documents. NAIJA LIGHT Solar Electrification Program. Banks and Other Financial Institutions Act 2020 (BOFIA), Failed Banks (Recovery of Debts) and Financial Malpractices in Banks Act (. From the table above, an architect commissioned to undertake a project with an estimated total cost (ETC) of N 18,200,500 will be entitled to a professional fee of N823,521.25 Nevertheless, the proportion of the above total fee payable to the architect is determined by the amount of work done. The fact that the employer has given their consent to the delegation of some of the main contractor's obligations to a subcontractor does not, therefore, give rise to any contractual relationship between the employer and the subcontractor and there is no privity of contract between the employer and subcontractor. A company can also mitigate its capital gains tax exposure by using any available roll-over reliefs, which apply if a business asset is sold and the proceeds used to acquire a new asset (or an interest in a new asset) to be used for trade. Generally, a Nigerian national does not require any authorisations to work in Nigeria. 19, 2011. Nigeria is a federation comprised of 36 states and the federal capital territory, Abuja. Shareholder loans are also common but are typically subordinated to the senior loans. 0. Preliminary EIA to be carried out at the end of the concept selection studies. 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. There are no prescribed methods of payment for construction work in Nigeria, as a result, the payment method to be adopted is usually a subject of negotiation between the parties and can be influenced by the nature of the project. However, Nigeria currently builds just 2,000 houses per year. This Scale was used for the next 14 years until 1992 when it was revised. Act (. 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. Renewable Energy Village in Kakuri, Kaduna State. 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 The Engineering Consultancy and Project Management Services Agreement, Charges and Conditions of Engagement produced by the Association of Consulting Engineers Nigeria (ACEN), the Council for the Regulation of Engineering in Nigeria (COREN) and the Nigerian Society of Engineers. An employer that breaches the Construction Law commits an offence and on conviction is liable for: individuals: a fine of up to NGN100,000 and a term of imprisonment of up to three months; In relation to health, safety and environment in the power sector, the Nigerian Electricity Regulatory Commission (NERC) published the Nigerian Electricity Health and Safety Code, 2014 (Code) and the Nigerian Electricity Health and Safety Standards Manual (Manual). However, it is common for a contractor's obligations to be qualified to the extent that once the contractor has used its best endeavours or has applied the degree of skill and care that could reasonably be expected from a professional of its status, the project company is obliged to accept the completed project. The Lagos State government has also partnered with Nigerian Mortgage Refinancing Company (NMRC) and private developers to construct and deliver 20,000 housing units to the state in the near future. The Corrupt Practices Act prescribes a penalty of five years imprisonment for any person who accepts or gives or agrees to accept, give or offer an inducement or reward to any person in relation to their principal's affairs or business. Implementing clear policies that promote and encourage investor confidence in the sector. Apapa-Wharf concrete road completed by AG Dangote Construction Company Ltd. Construction of the Lekki Deep Sea Port (. 11, 2011. It is not clear whether a common law mechanic's lien will apply to construction projects where the contractor is unpaid. Some projects are procured as wrapped-around engineering, procurement and construction projects. WebThis 1978 document had the architects fee starting at 4.5% for a project of N250,000.00 and sliding thereafter. Advised Kepco Energy Resources Ltd on the financing of its acquisition of Egbin Power PLC. 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%): Strengthening the sector's institutional framework and increasing transparency. d) PSGS 4: Property Management. 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. Where only one contractor submits a bid or proposal, or meets the prequalification requirements, the ICRC Act allows the relevant government agency to engage in direct negotiation with the contractor without the need for a competitive bidding. Fee proposed 10% of cost of Annual Services. Other states such as Delta, Ebonyi, Enugu, Edo, Ekiti, Gombe and the Federal Capital Territory (FCT) have all commenced affordable housing projects. However, where the owner of the land disposes of it, any gains realised will be liable to capital gains tax at 10%. 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 health and safety laws applicable to construction projects include the: for an individual offender, a fine of NGN100,000 or imprisonment for up to five years; for a corporate body offender, a fine of between NGN50,000 and NGN1 million. In 2005, Nigeria acceded to the Kyoto Protocol to the UN Framework Convention on Climate Change. In relation to construction professionals, each profession usually has a scale of professional fees which is applied to calculate the fees payable to the professional for the services provided on the project. Establishing a contract-based electricity market. This is, however, a contractual right and can only be exercised if it is included in the project document. The Constitution also creates the Federal High Court with jurisdiction over specific subject matter. Recent projects, including those listed below are all being developed through PPPs. Time or Duration Based Fees CHAPTER FIVE: Adjustment of Fees 5.1. State governments have also embarked on projects aimed at providing affordable housing for citizens. The rates payable will depend on which of Nigeria's 36 states the real property is located in. Construction & Engineering Laws and Regulations Nigeria 2022-2023. Nigeria LNG Train 7 project is an ongoing expansion of the Nigeria LNG Terminal at Bonny Island, Nigeria. The FGN is taking steps towards reducing the infrastructure deficit through increased spending as part of a 30-year infrastructure plan (National Integrated Infrastructure Master Plan) (Infrastructure Plan) with a target date of 2043, which aims to bring Nigeria's infrastructure stock to the GDP level recommended by the World Bank. This was intended to: Avoid, minimise or offset the negative impact of their business operations on the environment and local communities in which they operate. Advised Actis on its investment in the 459 MW Azura-Edo gas fired independent power plant in Edo State. Legal or equitable mortgage on all of the project company's interest in the project site, land and buildings and fixed plant and machinery. An EIA must be undertaken where the extent, nature or location of a proposed project or activity is likely to have a significant effect on the environment. 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. This paper concerns an investigation into the causes of high costs of construction in Nigeria. Arbitration is usually adopted as the principal means of dispute resolution in construction projects because it is a fairly a quicker means of resolving dispute and gives room for the disputing parties to select subject matter experts as the arbitrators. High debt-servicing costs and low tax revenue also left little scope for fiscal spending and new public projects. One which promotes competition, economy and efficiency. There is currently no VAT on the transfer of real property in Nigeria. In this revision, the starting band was increased from N250,000.00 to N5 Million. The Environmental Guidelines and Standards for the Petroleum Industry in Nigeria (EGASPIN). This can be mitigated by seeking assurances from the government on the basis of attracting foreign investment or undertaking projects in conjunction with multilateral agencies. There are 3 stages of payment. Table of Professional Charges 4.5. In addition, the foreign nationals being employed must obtain a residence and work permit on entry into Nigeria to enable them to both live and work in Nigeria. The following forms of security are typically taken in infrastructure projects: Share charge on all the shares and other equity rights (present and future) of the sponsors in the project company (and holding company). Specific laws govern procurement of goods and services in Nigeria. Fee proposed 10% of Gross Rent Payable. These laws include the US Foreign Corrupt Practices Act and the United Kingdom Bribery Act, 2010. The Abuja Metro Rail, the Abuja-Kaduna Rail and the 327 kilometre Itakpe-Ajaokuta-Warri Rail projects were completed in 2020. 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. Fee proposed 10% of Gross Rent Payable. e) PSGS 5: Facility Management. The Lagos-Ibadan Standard Gauge rail began commercial operations in 2021. None of these contract forms are mandatory. The Central Bank of Nigeria (CBN) and the National Insurance Commission have also issued anti-money laundering regulations applicable to the banking and financial and insurance sectors respectively. Debt providers include Development Finance Institutions, multilateral agencies, commercial banks, Export Credit Agencies. Construction contracts involving international counterparties typically provide for institutional arbitration under the International Chamber of Commerce Rules, the London Court of International Arbitration Rules, and the Rules of the Chartered Institute of Arbitrators (UK). These include the: Abia State Public Private Partnership and Investment Promotion Law of 2016. WebProposed Level of IT Professional fee for Projects CHAPTER FOUR: Method of Determining Remuneration 4.1. 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. Fee proposed is 10% of Gross Rent Payable, or Gross Proceeds of Sale/Purchase. There has been an increase in the development of renewable energy projects, mostly in the form of solar photo voltaic power plants, in the northern part of the country. Escrow arrangements whereby contract prices are paid into escrow accounts held by third party banks or financial institutions for release on specified conditions also operate as a form of payment security for the contractor. A change in applicable laws and standards necessitates such change. Lekki Deep Seaport project is also being developed as a PPP between the federal Government of Nigeria, the Lagos State Government and Tolaram Group. However, these are still subject to performance risks. In most projects, an incentive scheme is built into the contract to reward the contractor if it delivers the project ahead of schedule and on budget. A project company is required to obtain expatriate quota approvals for the relevant number of expatriate personnel it intends to employ. 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.) There is no requirement under Nigerian law that tax should be paid to reflect the increase in land value following the completion of a project. f) PSGS 6: Letting/Real Estate Brokerage/Agency. Tertiary education tax of 2% of its assessable profit. Professional bodies are formed as an association of professionals which enhance, control, and regulate the activities of its members. The working hours of all other employees are governed by their respective contracts of employment. 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. 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%. Other contractual provisions usually heavily negotiated by the parties include: The form of security (such as payment bonds, performance bonds, bank guarantees and third-party guarantees). 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 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. 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. The relationships between employers, contractors and subcontractors are typically governed by ordinary principles of contract law. 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. Advised New Electricity Development Company Ltd on the acquisition of Ikeja Electricity Distribution PLC. 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. The private sector has also shown an increased appetite for investment in real estate. 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. With regard to construction contracts (local or international), where parties have agreed to submit their disputes to Nigerian courts, most of the cases are filed in the state high courts. However, Nigeria currently builds just 2,000 houses per year. The 1999 Constitution of the Federal Republic of Nigeria (as amended) (Constitution) creates a high court for each state and the federal capital territory. Most government and private agencies usually have standard form letters that are issued to a selected bidder, and the use of engagement letters is quite common. This Scale was used for the next 14 years until 1992 when it was revised. For example, in Lagos State, the transfer fees payable on a transfer of land total 3% of the assessed fair market value of the property. Provided support to the commercial law development program of the United States Department of Commerce in workshops leading to the publication of the book titled. However, this rate does not apply to persons occupying executive, administrative, technical or professional positions such as engineers, engineering technologists, engineering technicians, engineering craftspersons, and project managers. Recently-commissioned Abuja light rail, the first (rapid transit) light rail project in Nigeria. For example, the persons employed to provide the services must obtain any mandatory authorisations. 650,000 barrels-per-day capacity oil refinery being constructed by the Dangote Group in Lagos. WebFee is to be negotiated subject to a minimum of N50,000=. However, Nigeria currently builds just 2,000 houses per year. The project owner typically takes the following risks: Risk of ground conditions, including any archaeological discoveries or ionisation and contamination of the soil. Advised an international energy group, and a syndicate of lenders, on a USD530 million facility to an indigenous exploration and production company. An arbitral award is both binding and enforceable by Nigerian courts. 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 EIA Act specifies different types of projects in respect of which a mandatory study must be conducted. 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 The most commonly used ADR methods in Nigeria are arbitration and mediation. WebProposed Level of IT Professional fee for Projects CHAPTER FOUR: Method of Determining Remuneration 4.1. Parties generally have a choice over the applicable arbitration rules. Section 46 of BOFIA prescribes a penalty of up to five years imprisonment and fine of NGN5,000,000 or both for an employee or officer of a bank who asks for or receives or agrees to receive any gift, money, property or thing of value for their personal benefit, for procuring or trying to procure for any person, any advances, loans or credit facility from the bank, or any other service rendered in line with their duty as an employee of the bank. Container terminal and related infrastructure of the container terminal and related infrastructure of the Lekki Deep Sea Port ( the..., Abuja the Petroleum Industry in Nigeria LNG Train 7 project is an ongoing expansion of the functions of container! Operations in 2021 Bribery professional fees in construction projects in nigeria, 2010 of Annual services including those listed below are all developed! Laws and Standards for the next 14 years until 1992 when it revised. 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