Proposed construction of a rail line linking Kano, Katsina in Nigeria to Maradi in Niger Republic. Where possible, promote positive impacts. The PPA requires all procurement of goods and works by a public entity to be done by way of open competitive bidding. Time or Duration Based Fees CHAPTER FIVE: Adjustment of Fees 5.1. 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 (. Alu - February 25, 2022. 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 Employers are not required to make statutory redundancy payments or any other payments to employees at the end of a project, unless the employment contract requires such payments. In this revision, the starting band was increased from N250,000.00 to N5 Million. N60m (estimated project cost) multiplied by a minimum of 7.5% (scale of fees for new projects). 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. The Failed Banks (Recovery of Debts) and Financial Malpractices in Banks Act, 2004 prescribes a penalty of three years imprisonment for similar offences as those immediately above. f) PSGS 6: Letting/Real Estate Brokerage/Agency. 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). Failure of the project to meet the performance standards. The Abuja Metro Rail, the Abuja-Kaduna Rail and the 327 kilometre Itakpe-Ajaokuta-Warri Rail projects were completed in 2020. Controversy is sprouting again among building sector professionals on the scale of fees being charged in the industry. On 28 May 2020, the Governor of Lagos State commissioned 246 housing units in the Lekki area of Lagos State. 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. Percentage Fee Scales 4.4. 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. Types of Professional Fees 4.2. 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. Webprofessionals in the Built Industry to develop an harmonised scale of fees. 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. The Q&A gives a high level overview of the main trends and significant deals; the main parties; procurement arrangements; transaction structures and corporate vehicles; financing projects; security and contractual protections that funders require; standard forms of contracts; risk allocation; excluding liability, including caps and force majeure; contractual provisions covering material delays and variations; appointing and paying contractors; subcontractors; licences and consents; projects insurance; labour laws; health and safety; environmental issues; corrupt business practices and bribery; bankruptcy/insolvency; public private partnerships (PPPs); dispute resolution; tax and mitigating tax liability; the main construction organisations; and proposals for reform. Professional bodies are formed as an association of professionals which enhance, control, and regulate the activities of its members. Equity funding can be provided by project sponsors, private equity funds, impact investors and individuals. This can be done as currently there are no thin capitalisation rules in Nigeria and parties can take advantage of this. WebConstruction projects are generally not exempt from VAT, and are liable to VAT at 7.5%. Generally, a contractor has no obligation to personally perform all the works involved in the project unless expressly obliged under the agreement. Fee proposed 10% of Gross Rent Payable. 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. This trend has continued in 2021, and a report published by the World Bank in June 2021 (. Where there is a third party with an interest in the project, it is standard practice for the consultants to be required to provide specific collateral warranties in favour of the third party. 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. This Scale was used for the next 14 years until 1992 when it was revised. The concept of PPPs as an alternative to the funding of public utilities is gradually gaining popularity in Nigeria. The current administration has also budgeted NGN4.125 trillion (about USD9.9 billion) for capital expenditure in the 2021 Appropriation Act. Advance Fee Fraud and Other Related Offences Act 2006. The procurement legislation in Nigeria are set out in the Public Procurement Act 2007 (PPA) (including the Public Procurement (Goods and Works) Regulations 2007 and the Public Procurement (Consultancy Services) Regulations 2007 made under the PPA) and the Infrastructure Concession Regulatory Commission Act, 2005 (ICRC Act). f) PSGS 6: Letting/Real Estate Brokerage/Agency. Construction contracts do not differ for international projects. Approval of project documents by lenders. The EIA Act specifies different types of projects in respect of which a mandatory study must be conducted. 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. N60m (estimated project cost) multiplied by a minimum of 7.5% (scale of fees for new projects). Recent projects, including those listed below are all being developed through PPPs. The EIA Act makes it an offence for any person to embark on any activity or project that may have significant environmental effects, without having first undertaken, and submitted to the relevant government environmental agency, an Environmental Impact Assessment Report (EIA). Nigeria is a federation comprised of 36 states and the federal capital territory, Abuja. Tertiary education tax of 2% of its assessable profit. In practice, an eight to nine-hour working day is the norm. 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%): WebFor a contract based on Bills of Quantities (BOQ), the total fees are apportioned in the following manner: Service A (Estimating & Cost Advice Stage) 7.5% Service B (Documentation Stage) 42.5% Service C (Contract Administration Stage) 30% Service D (Final Account Stage) 20% Provisional BOQ Contract: This is, however, a contractual right and can only be exercised if it is included in the project document. 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). Builders must be licensed by the Nigerian Institute of Building. A special purpose vehicle used to execute the project will be liable to pay: 30% of its total profit (less any allowable deductions and capital allowances) if it has more than NGN100,000,000 turnover; 20% if it has a turnover between NGN25,000,000 and NGN100,000,000; or. 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. 0. 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. 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. The Pension Reform Act 2014 imposes an obligation on employers to obtain life insurance cover for all their employees. 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. There is also no compulsory levy to fund local infrastructure. 11, 2011. 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. Advised Daniel Power Plants Company Nigeria Ltd and a consortium on the acquisition of an 80% equity stake in Ogorode Power Generation Company Ltd in Delta State, Nigeria. Where the dispute relates to the construction project itself, it is the high court of the state where the asset is located that would have jurisdiction over the dispute. 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. 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). Shareholder loans are also common but are typically subordinated to the senior loans. Advised Actis on its investment in the 459 MW Azura-Edo gas fired independent power plant in Edo State. 0% if its turnover is less than NGN25,000,000. Expatriate Quota Approvals are granted on a temporary basis, usually for two to three years and can be renewed up to five times for up to 10 years in some instances. 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. The 1999 Constitution of the Federal Republic of Nigeria (as amended) (Constitution) creates a high court for each state and the federal capital territory. The PPA contains detailed provisions in respect of the procurement process, including the principles, planning, implementation and general conduct of public procurement. Some Nigerian construction contracts permit the owner to request the contractor to alter the works and services (or any part of them) through change orders, change requests, and change notices. Construction & Engineering Laws and Regulations Nigeria 2022-2023. In some instances, there could be a combination of more than one funding arrangement, for instance, a term loan facility and a revolving credit facility being provided under a single financing arrangement to a project. The ICRC Act provides for the invitation of open competitive bids which must be published in at least three national newspapers having wide circulation in Nigeria. The REA's mandate is to increase electricity access to rural and underserved communities through public and private sector engagement. WebThis 1978 document had the architects fee starting at 4.5% for a project of N250,000.00 and sliding thereafter. 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 (. 0. 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. Professional bodies are formed as an association of professionals which enhance, control, and regulate the activities of its members. The Borno state government has commenced an Owner Occupier scheme for 2,787 housing units in the state. The deal was valued at USD414.9 billion. 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. 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 to these laws, various states have passed laws that regulate environmental issues in their state. Nigeria LNG Train 7 project is an ongoing expansion of the Nigeria LNG Terminal at Bonny Island, Nigeria. 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