Approval of project documents by lenders. Legal or equitable mortgage on all of the project company's interest in the project site, land and buildings and fixed plant and machinery. Generally, a contractor has no obligation to personally perform all the works involved in the project unless expressly obliged under the agreement. 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. Draft EIA to be carried out and a report submitted to the DRP at the end of the project conceptual design and will form the basis for approval by the DPR of the detailed engineering design. 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. If this applies, any gains realised from the disposal of the asset will not be subject to capital gains tax but the company will be entitled to claim a roll-over relief if the new asset is acquired, or an unconditional contract for the acquisition is entered into, within 12 months before or after, the disposal of the old asset. Construction & Engineering Laws and Regulations Nigeria 2022-2023. 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 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. Fee proposed is 10% of Gross Rent Payable, or Gross Proceeds of Sale/Purchase. Where possible, promote positive impacts. For projects in the public sector, parties are mandatorily required to comply with procurement rules and regulations. Webprofessionals in the Built Industry to develop an harmonised scale of fees. In most contracts for the construction of process plants, liability is usually capped at 25% of the contract price. 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. 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. There is currently no VAT on the transfer of real property in Nigeria. Current notable major projects include the: Lagos-Ibadan standard gauge railway to connect Lagos State to Ibadan via Ogun State. In Lagos State, under the Construction Workers Safety Law (. For example, most of the roads networks in Nigeria are still in bad shape. Rules of the Chartered Institute of Arbitration (UK). Basis of Professional Charges for Consulting Services 4.3. 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 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. Professional Bodies in Nigerian Construction Industry. In July 2020, the Nigerian President approved the payment of EUR15.21 million and NGN1.708 billion as counterpart funding for the PPI. Withholding tax of 10% on any dividend paid (unless it has a tax exemption), although if the recipient of the dividend is located in a country with which Nigeria has a double tax treaty, the rate would be reduced to 7.5%. 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. It is not clear whether a common law mechanic's lien will apply to construction projects where the contractor is unpaid. Contracts for the KanoJibia and Port Harcourtaiduguri lines were confirmed by the Federal Executive Council. Implementing clear policies that promote and encourage investor confidence in the sector. There are rules in Nigeria that prohibit corrupt business practices and bribery generally. Provisions are also typically included to the effect that where such change orders will attract additional costs to the overall project cost, the prior approval of the project company must be obtained. The slow implementation of government budgets, however, has been a perennial problem in Nigeria. In relation to projects in the private sector, the process of appointment depends on the internal rules developed by project sponsors. Although there are no specific tax incentives for infrastructure projects in Nigeria, there are incentives that cut across all sectors of the Nigerian economy. 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 ensure that the working environment cannot reasonably constitute a health hazard to the employees; make adequate provision for the protection of the health of its workers; insure all employees against injury to health or other forms of physical injury, accident or death that may occur in the course of duty. Advised Accugas Ltd on a USD445 million refinancing of facilities for the construction of a gas processing facility and the acquisition of a 100% stake in East Horizon Gas Company Ltd. These include the: Abia State Public Private Partnership and Investment Promotion Law of 2016. 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. Builders must be licensed by the Nigerian Institute of Building. 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. The flip side of this is that an estimated loss scheme (liquidated damages) is also built into the contract to subtly compel the contractor to deliver on time and on budget. Cost is a vital element in every development. The PPA also requires procurement to be conducted in a manner that is: Equitable for ensuring accountability and conformity with its provisions (with the aim of achieving value for money and fitness of purpose). 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). 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 most heavily negotiated provisions are those relating to the contractor's liability in specific events of default. 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. This paper concerns an investigation into the causes of high costs of construction in Nigeria. 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. 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 Constitution also creates the Federal High Court with jurisdiction over specific subject matter. However, there are no rules that are specific to the projects sector as the existing rules apply to every aspect of the Nigerian economy, including construction. (. The relationships between employers, contractors and subcontractors are typically governed by ordinary principles of contract law. 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. 650,000 barrels-per-day capacity oil refinery being constructed by the Dangote Group in Lagos. The Harmful Wastes Act criminalises the unlawful carriage, deposit or possession of harmful waste in Nigeria, its territorial waters or exclusive economic zones. The Employee Compensation Act 2010 established the Employees' Compensation Fund (Fund) and requires every employer to make a minimum monthly contribution of 1% of its total monthly payroll into the Fund. The Pension Reform Act 2014 imposes an obligation on employers to obtain life insurance cover for all their employees. A Q&A guide to construction and projects law in Nigeria. Parties to construction contracts in Nigeria typically negotiate their contracts on the basis of a draft prepared by their advisers including lawyers. There are usually provisions incorporated in the project documents to enable the consultants terminate the contract in the event of the contractor's insolvency. In this revision, the starting band was increased from N250,000.00 to N5 Million. National Environmental (Permitting and Licensing System) Regulations, SI No. The two major funding models for local and international projects in Nigeria are: Equity, including mezzanine finance. The funders may decide to call for the performance bond or take out the parent company guarantee provided by the contractor where such exists. The railway is currently being extended to the Lagos Port to ease import and export of goods. Extensive rehabilitation of the Lagos-Ibadan expressway, one of the largest road networks in Africa, the oldest expressway and busiest inter-state route in Nigeria. 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. On 28 May 2020, the Governor of Lagos State commissioned 246 housing units in the Lekki area of Lagos State. 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 0. The EFCC Act prohibits anyone from concealing, removing from Nigeria or transferring to nominees, the proceeds of an economic and financial crime, on behalf of another, with the knowledge that such proceeds are as a result of criminal conduct by the principal. Parties generally have a choice over the applicable arbitration rules. Renewable Energy Village in Kakuri, Kaduna State. 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. Webprofessionals in the Built Industry to develop an harmonised scale of fees. Sponsors and project developers often incorporate those requirements into a contract as part of the employer's requirements of the contractor. WebThis 1978 document had the architects fee starting at 4.5% for a project of N250,000.00 and sliding thereafter. 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. N60m (estimated project cost) multiplied by a minimum of 7.5% (scale of fees for new projects). Factories Act. Alu - February 25, 2022. Professional bodies are formed as an association of professionals which enhance, control, and regulate the activities of its members. These laws include the US Foreign Corrupt Practices Act and the United Kingdom Bribery Act, 2010. d) PSGS 4: Property Management. The Lagos-Ibadan Standard Gauge rail began commercial operations in 2021. Where the project involves the provision of utilities, the project company will usually prefer to impose absolute obligations on the contractor (to the effect that the completed project must be fit for a particular purpose and remain fit for a specified period). 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. However, if the Nigerian national is an engineer, engineering technologist, engineering technician, engineering craftsperson, or builder, they must register with either the Council for the Regulation of Engineering in Nigeria (COREN) or the Builders Council under the Builders Registration 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. 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. Types of Professional Fees 4.2. National Environmental (Electrical/Electronic Sector) Regulations, SI No. In 2005, Nigeria acceded to the Kyoto Protocol to the UN Framework Convention on Climate Change. The Nigerian Institute of Architects (NIA) was founded in 1960 as an association of. 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. 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. WebFee is to be negotiated subject to a minimum of N50,000=. 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. Deep-sea port with a railway project connecting Calabar with Port Harcourt and Onne Deep Sea Port. The General Conditions of Contract for the procurement of works 2011. 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