WebFee is to be negotiated subject to a minimum of N50,000=. Currently leading the team advising a US company in connection with the development of a 30MW Coal fired power plant in Nigeria. Controversy is sprouting again among building sector professionals on the scale of fees being charged in the industry. 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. Advised New Electricity Development Company Ltd on the acquisition of Ikeja Electricity Distribution PLC. Typically, contractors are allocated all the following risks: Risk of compliance with applicable law and regulation. This is broken down into. Professional Bodies in Nigerian Construction Industry. Alu - February 25, 2022. 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. The contractors also obtain limited time warranties, typically between 12 and 24 months, from the original equipment manufacturers, which they pass on to the project owner. Equity funding can be provided by project sponsors, private equity funds, impact investors and individuals. byNicholas Okafor, Adeola Sunmola, Victor Samuel and Chisom Okolie, Udo Udoma and Belo-Osagie. The Borno state government has commenced an Owner Occupier scheme for 2,787 housing units in the state. Cost is a vital element in every development. Harmful Waste (Special Criminal Provisions, etc.) 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 Usually, the state where the construction contract is implemented or ought to be performed will determine the high court that will have jurisdiction over the contractual dispute. 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. In July 2020, the Nigerian President approved the payment of EUR15.21 million and NGN1.708 billion as counterpart funding for the PPI. 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. The EIA Act sets out the principles, procedure and methodology for determining the environmental effects of public and private projects. 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. The current monthly minimum wage prescribed by the National Minimum Wage Act 2019 (NMWA) is NGN30,000. Fee proposed is 10% of Gross Rent Payable, or Gross Proceeds of Sale/Purchase. If passed, the proposed legislation will establish a framework for Nigerian professionals to be given preference in the implementation of construction projects in Nigeria. WebConstruction projects are generally not exempt from VAT, and are liable to VAT at 7.5%. The railway is currently being extended to the Lagos Port to ease import and export of goods. Establishing a contract-based electricity market. Assignment of rights in the project documents, insurance policies, hedging arrangements, future and present undertaking, and so on. State governments have also embarked on projects aimed at providing affordable housing for citizens. The REA's mandate is to increase electricity access to rural and underserved communities through public and private sector engagement. It is uncommon for payment obligations under construction contracts to be secured by land or property. Percentage Fee Scales 4.4. 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 (. 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. Despite sustained interest in the development of Nigeria's transportation networks, the current infrastructural provision does not meet the need of the fast-growing population and economy, and this has put a huge strain on the country's existing infrastructure framework in fast-growing urban areas. The current administration has also budgeted NGN4.125 trillion (about USD9.9 billion) for capital expenditure in the 2021 Appropriation Act. 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. 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. In 2020, the FGN issued a NGN162.5 billion (about USD393.4 million). A project company is required to obtain expatriate quota approvals for the relevant number of expatriate personnel it intends to employ. 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. 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. The deal was valued at USD414.9 billion. Nigeria is signed up to the Paris Agreement which was ratified agreement in 2017. 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 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. USD3 billion methanol production plant at Brass in Bayelsa State. 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. There are other non-compulsory insurance products, such as erection all risk insurance, that a contractor or project company will typically procure. 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 (. Under these rules. This Scale was used for the next 14 years until 1992 when it was revised. The slow implementation of government budgets, however, has been a perennial problem in Nigeria. 40 days after execution of the instrument, where an instrument is liable to stamp duty at a nominal rate. The private sector has also shown an increased appetite for investment in real estate. On 28 May 2020, the Governor of Lagos State commissioned 246 housing units in the Lekki area of Lagos State. Where an instrument is executed outside Nigeria, stamp duty must be paid within 30 days from the date on which the instrument is first brought into Nigeria. 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. National Environmental (Electrical/Electronic Sector) Regulations, SI No. The insurance must have a value that is at least three times the total annual emoluments of all the employees. Where the FGN or any of its agencies is a party to the proceedings or where the dispute relates to the executive, administrative or managerial action or inaction of the FGN (other than a simple breach of contract), the Federal High Court would have jurisdiction. Professional Bodies in Nigerian Construction Industry. 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 (. According to the Minister of Transport, the Kano-Maradi rail is aimed at facilitating bilateral trade between Nigerian and Niger. One which promotes competition, economy and efficiency. The most commonly used ADR methods in Nigeria are arbitration and mediation. Rules of the Chartered Institute of Arbitration (UK). Due to the increasing cost of key infrastructure projects in the country and dwindling government financing, the government has used public private partnership (PPP) arrangements to finance projects for which the government is not able to secure debt financing, for example the: Highway Development and Management Initiative, a PPP, which is expected to attract over NGN1 trillion in private investment for the development and maintenance of road networks. This law is expected to provide a much-needed overhaul of the Nigeria's oil and gas sector, thereby creating multiplier effects across the entire construction chain and the economy. There is also no compulsory levy to fund local infrastructure. 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. Fee proposed 10% of cost of Annual Services. 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. Controversy is sprouting again among building sector professionals on the scale of fees being charged in the industry. Where possible, promote positive impacts. 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. Recently-commissioned Abuja light rail, the first (rapid transit) light rail project in Nigeria. 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. Nigeria LNG Train 7 project is an ongoing expansion of the Nigeria LNG Terminal at Bonny Island, Nigeria. Factories Act. Change in law risk. Rivers State Public-Public Participation in Infrastructure Development Law 2009. This Scale was used for the next 14 years until 1992 when it was revised. Percentage Fee Scales 4.4. 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. 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. N60m (estimated project cost) multiplied by a minimum of 7.5% (scale of fees for new projects). 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 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). 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 obligations imposed on the contractor or construction professional will depend largely on the parties to the contract. 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 transaction, which is valued at USD311.2 million, involved the sale of three power stations by the Rivers State Government to the investor. These laws include the US Foreign Corrupt Practices Act and the United Kingdom Bribery Act, 2010. Covenants, representations and warranties. London Court of International Arbitration Rules. Construction & Engineering Laws and Regulations Nigeria 2022-2023. The CC Act also prescribes the same penalty in relation to similar offences as those immediately above. 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. 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. A change will enhance efficiency of the project's operations. 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 In addition, each licence issued by the NERC to operators in the power sector, including generation plant owners, require them to comply with Health and Safety standards, regulations and codes. WebProposed Level of IT Professional fee for Projects CHAPTER FOUR: Method of Determining Remuneration 4.1. A change request will trigger an obligation on the contractor to submit a proposal describing how it will implement the requested change, together with any adjustments to the project timetable and fees payable as a result of such change. In some cases, a project company may procure a single project insurance package and by virtue of the project agreements, share the benefit of the insurance cover with different project service providers. In this revision, the starting band was increased from N250,000.00 to N5 Million. There is no specific law on how construction disputes should be resolved in 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. Advised Actis on its investment in the 459 MW Azura-Edo gas fired independent power plant in Edo State. Under Nigerian law, exclusion of liability is typically achieved through limitation of liability clauses. A change in applicable laws and standards necessitates such change. Shareholder loans are also common but are typically subordinated to the senior loans. The preferred developer is selected through an open competitive bidding process in compliance with the PPA. Under the terms of the contract, a sub-contractor can suspend work or terminate a sub-contract on a main contractor becoming insolvent. The Stamp Duties Act 2004 (as amended) requires stamp duty to be paid on instruments executed in Nigeria or relating to any property situated in Nigeria or matter to be done in Nigeria. Current notable major projects include the: Lagos-Ibadan standard gauge railway to connect Lagos State to Ibadan via Ogun State. 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 (. The General Conditions of Contract for the procurement of works 2011. 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. f) PSGS 6: Letting/Real Estate Brokerage/Agency. 0. f) PSGS 6: Letting/Real Estate Brokerage/Agency. d) PSGS 4: Property Management. The EIA Act specifies different types of projects in respect of which a mandatory study must be conducted. There are 3 stages of payment. 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%. This paper concerns an investigation into the causes of high costs of construction in Nigeria. 11, 2011. 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 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. 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. 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. It also contains information on the legal, financial, environmental and technical aspects of the proposed project. 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.) In 2005, Nigeria acceded to the Kyoto Protocol to the UN Framework Convention on Climate 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. 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. Professional Bodies in Nigerian Construction Industry. Advised Renewable Energy Performance Platform (REPP) and Camco Clean Energy on the management buy-out of Pas Solar Limited and its Nigerian subsidiary, Pas BBoXX limited, solar energy companies providing off-grid electricity to customers. The standard document for PPP is a concession agreement which is executed between the relevant government agency and the private sector participant. In this revision, the starting band was increased from N250,000.00 to N5 Million. 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. 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 collapse in oil prices and the pandemic plunged the country into recession in 2020. The Abuja Metro Rail, the Abuja-Kaduna Rail and the 327 kilometre Itakpe-Ajaokuta-Warri Rail projects were completed in 2020. The EGASPIN provides for the following processes: Environmental screening to be carried out during concept selection studies. 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: Another right of the client is to take physical possession of and secure the site. 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. However, Nigeria currently builds just 2,000 houses per year. However, Nigeria currently builds just 2,000 houses per year. 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. 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 Advance Fee Fraud and Other Related Offences Act 2006. Professional bodies are formed as an association of professionals which enhance, control, and regulate the activities of its members. It allows government agencies to: Request quotations or expressions of interest. Contracts for the KanoJibia and Port Harcourtaiduguri lines were confirmed by the Federal Executive Council. The repayment of the loan is structured in accordance with a repayment schedule by way of amortisation, or very rarely, a bullet repayment. The most heavily negotiated provisions are those relating to the contractor's liability in specific events of default. 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. In June 2020, the FGN approved a USD120 million continued construction and completion of the Kashimbila multipurpose dam in Taraba State, which is expected to generate 40 MW of electricity and water for the community. The Protocol has not yet been enacted in local legislation and, therefore, it is not yet being strictly enforced. Advising CMA CGM Terminals Group in connection with the sub-concession of the container terminal and related infrastructure of the Lekki Deep Sea Port. Various states in Nigeria have also passed laws regulating PPP projects in their states. Deep-sea port with a railway project connecting Calabar with Port Harcourt and Onne Deep Sea Port. Fee proposed 10% of Gross Rent Payable. Guidelines for the Development of Local Content in the Nigerian Electricity Supply Industry. The project owner typically takes the following risks: Risk of ground conditions, including any archaeological discoveries or ionisation and contamination of the soil. The project contract usually contains provisions that require payment to be made for the demobilisation and repatriation of foreign personnel to their home countries. 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. For 2,787 housing units in the 2021 Appropriation Act all Risk insurance, that a contractor or company! 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