Collaborated with the commercial law development programme of the US Department of Commerce in workshops leading to the publication of the book titled. d) PSGS 4: Property Management. There is currently no VAT on the transfer of real property in Nigeria. National Environmental (Electrical/Electronic Sector) Regulations, SI No. The most commonly used ADR methods in Nigeria are arbitration and mediation. WebFee is to be negotiated subject to a minimum of N50,000=. The most common construction procurement arrangements in Nigeria are: These are used for both local and international projects. The EGASPIN provides for the following processes: Environmental screening to be carried out during concept selection studies. The PPA contains detailed provisions in respect of the procurement process, including the principles, planning, implementation and general conduct of public procurement. The common contract forms used for local projects are: The Standard Bidding and Contract Documents produced by the Bureau of Public Enterprises (for public procurement works). It is uncommon for payment obligations under construction contracts to be secured by land or property. Recently-commissioned Abuja light rail, the first (rapid transit) light rail project 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 The Harmful Wastes Act criminalises the unlawful carriage, deposit or possession of harmful waste in Nigeria, its territorial waters or exclusive economic zones. 11, 2011. f) PSGS 6: Letting/Real Estate Brokerage/Agency. It is common for the funder to enter into a direct agreement with project sponsor/company and the contractor that will provide the funders with step-in rights to terminate the project contract with the contractor and appoint a replacement contractor. 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. 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. Percentage Fee Scales 4.4. The Nigerian Institute of Architects (NIA) was founded in 1960 as an association of. Where a project involves the FGN, the procurement and tender process is usually supervised by the Infrastructure Concession Regulatory Commission and the Bureau for Public Procurement. The private sector has also shown an increased appetite for investment in real estate. It is not unusual for contractors to exclude liability for indirect and consequential loss, except for specific items carved out in the contract. 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. Change in law risk. 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. The funders may decide to call for the performance bond or take out the parent company guarantee provided by the contractor where such exists. 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 (. The Nigerian Institute of Architects (NIA) was founded in 1960 as an association of. The EIA must be approved by the Department of Petroleum Resources (DPR). 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. 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. Tertiary education tax of 2% of its assessable profit. There are 3 stages of payment. Federal Ministry of Works Contract (variant of the JCT). Other provisions include warranties, risk allocation and methods for payment of contractor's fees, as well as performance guarantees. Standard forms of contracts prepared by the Joint Contract Tribunal (JCT). Act (. 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. In Nigeria, force majeure events are commonly classified into the following three categories: It is not enough for a party to allege that its inability to perform a contract is as a result of circumstances beyond its control. This Scale was used for the next 14 years until 1992 when it was revised. Rivers State Public-Public Participation in Infrastructure Development Law 2009. Section 2(i), part 2 of the Manual makes detailed provisions on fire safety, protection, evacuation, first responders and emergency planning. None of these contract forms are mandatory. Legal or equitable mortgage on all of the project company's interest in the project site, land and buildings and fixed plant and machinery. 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. However, Nigeria currently builds just 2,000 houses per year. Fee proposed 10% of Gross Rent Payable. Nigeria LNG Train 7 project is an ongoing expansion of the Nigeria LNG Terminal at Bonny Island, Nigeria. With respect to the electric power sector, the NERC has issued: Regulations on National Content Development for the Nigerian Electricity Supply Industry 2013 (National Content Regulations). 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%. Establishing a contract-based electricity market. Nigeria LNG Train 7 project is an ongoing expansion of the Nigeria LNG Terminal at Bonny Island, Nigeria. The collapse in oil prices and the pandemic plunged the country into recession in 2020. There are usually provisions incorporated in the project documents to enable the consultants terminate the contract in the event of the contractor's insolvency. This paper concerns an investigation into the causes of high costs of construction in Nigeria. There is no specific law on how construction disputes should be resolved in Nigeria. The working hours of all other employees are governed by their respective contracts of employment. 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 (. The standard document for PPP is a concession agreement which is executed between the relevant government agency and the private sector participant. Table of Professional Charges 4.5. 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). Advised Actis on its investment in the 459 MW Azura-Edo gas fired independent power plant in Edo State. Parties to construction contracts in Nigeria typically negotiate their contracts on the basis of a draft prepared by their advisers including lawyers. 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 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. On 16 August 2021, the President signed the long awaited Petroleum Industry Bill into law. The project contract usually contains provisions that require payment to be made for the demobilisation and repatriation of foreign personnel to their home countries. In Lagos State, under the Construction Workers Safety Law (. Advised a syndicate of lenders in connection with the amendments to, and increase in the size of a loan of approximately USD530 million to Shoreline Natural Energy Resources Limited, a Nigerian oil and gas exploration and production company. Contracts for the KanoJibia and Port Harcourtaiduguri lines were confirmed by the Federal Executive Council. Types of Professional Fees 4.2. 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. 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%. Act (. 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. Advised Kepco Energy Resources Ltd on the financing of its acquisition of Egbin Power PLC. The proposed project is submitted to the Federal Executive Council (FEC) for approval. 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. 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. Where possible, promote positive impacts. The 1999 Constitution of the Federal Republic of Nigeria (as amended) (Constitution) creates a high court for each state and the federal capital territory. 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. 19, 2009. Any person who commits an offence by act or omission, aids another to commit an offence, or counsels or procures another to commit an offence is themselves guilty of the offence and liable on conviction to imprisonment for life. 0. 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. Typically, third parties and end users are not parties to the construction contract(s) and cannot enforce an action for breach against the contractors for the designs and construction. The most common corporate structure for projects in Nigeria is a private company limited by shares. 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. State governments have also embarked on projects aimed at providing affordable housing for citizens. Construction & Engineering Laws and Regulations Nigeria 2022-2023. Fee proposed is 10% of Gross Rent Payable, or Gross Proceeds of Sale/Purchase. It is hoped that this situation will generally improve following the completion of various road projects and road construction from funds realised from the FGN Sukuk (. One of the functions of the Bureau of Public Procurement is to prepare and update standard bidding and contract documents. Advised Kepco Energy Resources Limited, the joint venture company established by the Sahara Energy Group and Korea Electric Power Corporation, in connection with its acquisition of a 70% equity interest in Egbin Power Plc. 19, 2011. Equals N4.5m (architects fee for pre-contract services) Note; ARCON conditions of engagement say that these fees are the minimum that should be charged, therefore, your design circumstances may warrant a little increase in the percentage. Fee proposed 10% of cost of Annual Services. 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. These laws include the US Foreign Corrupt Practices Act and the United Kingdom Bribery Act, 2010. Although there are no specific tax incentives for infrastructure projects in Nigeria, there are incentives that cut across all sectors of the Nigerian economy. The two major funding models for local and international projects in Nigeria are: Equity, including mezzanine finance. According to the Minister of Transport, the Kano-Maradi rail is aimed at facilitating bilateral trade between Nigerian and Niger. For projects in the power sector, turnkey engineering, procurement and construction contracts between the project company and the contractor, continue to be popular, with the project having separate operation and maintenance arrangements. 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. Key member of the team currently advising a leading Nigerian broadband communication solution integrator on the financing of fibre optic cables and the restructuring of existing debt. However, the application of these fee scales is usually not mandatory and parties can instead agree that a lump sum will be paid in instalments at agreed milestones or generally agree on a satisfactory fee payment structure. Advised New Electricity Development Company Ltd on the acquisition of Ikeja Electricity Distribution PLC. Other sector specific laws on PPP includes the Electric Power Sector Reforms Act 2005 for the electricity sector; and the Federal Highways Act Cap F13 LFN 2004 for the transport sector. Train 7 project is submitted to the Minister of Transport, the first ( rapid transit ) rail... Azura-Edo gas fired independent power plant in Edo State bond or take out the parent company guarantee by. 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