professional fees in construction projects in nigeria

Advised New Electricity Development Company Ltd on the acquisition of Ikeja Electricity Distribution PLC. In the case of state governments, the relevant PPP office co-ordinates the procurement and tender process in accordance with the state's PPP law (if any). This Scale was used for the next 14 years until 1992 when it was revised. 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. Corporate guarantee from the sponsors (and sponsors' parent companies in international projects). 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. Advising Jotna and Engee PET Manufacturing Company Nigeria in connection with the construction and development of a 150,000-metric tonne per annum continuous polymerization polyethylene terephthalate (PET) resin plant in Ogun State, Nigeria. 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. 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. The contractual provisions that govern or limit liability include provisions dealing with any of the following: Indemnities on account of losses caused by delay. Including provisions that require interest on delayed payments is also one of the means of ensuring that contractual payments are made promptly and diligently. 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 Constitution also creates the Federal High Court with jurisdiction over specific subject matter. 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%. 0. The concept of PPPs as an alternative to the funding of public utilities is gradually gaining popularity in Nigeria. In practice, an eight to nine-hour working day is the norm. In Lagos State, under the Construction Workers Safety Law (. The funders may decide to call for the performance bond or take out the parent company guarantee provided by the contractor where such exists. 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 Cost is a vital element in every development. Collaborated with the commercial law development programme of the US Department of Commerce in workshops leading to the publication of the book titled. Currently advising the project sponsors in connection with the 500 MW independent Gas Power Project proposed to be constructed by Oma Power Generation Limited in Abia State, Nigeria. f) PSGS 6: Letting/Real Estate Brokerage/Agency. Cost is a vital element in every development. 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 NESREA has primary responsibility of enforcing compliance with laws, guidelines, policies and standards on environmental matters in Nigeria, such as water quality, noise, ozone protection, air and atmospheric protection and has issued various regulations on compliance requirements. Various states in Nigeria have also passed laws regulating PPP projects in their states. Percentage Fee Scales 4.4. Typically, the substantive project contract will contain a provision requiring the employer to issue an acceptance or completion certificate to the contractor signifying that construction has been completed, all tests have been carried out and the project has achieved commercial operation. 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 (. The PPP model has been implemented in various sectors of the Nigerian economy such as ports, transportation (road, rail, water and airports), health, housing, education, free trade zones, and most recently, in the electric power sector. 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. 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. The working hours of all other employees are governed by their respective contracts of employment. There are usually provisions incorporated in the project documents to enable the consultants terminate the contract in the event of the contractor's insolvency. WebThis 1978 document had the architects fee starting at 4.5% for a project of N250,000.00 and sliding thereafter. Failure to stamp an instrument will render it inadmissible as evidence in any civil proceedings before any Nigerian court. Banks and Other Financial Institutions Act 2020 (BOFIA), Failed Banks (Recovery of Debts) and Financial Malpractices in Banks Act (. Guidelines for the Development of Local Content in the Nigerian Electricity Supply Industry. The two major funding models for local and international projects in Nigeria are: Equity, including mezzanine finance. The VAT Act 2004 (as amended) and the Finance Act 2020 impose VAT on the value of the consideration for the supply or purchase of goods and services in Nigeria except where those goods and services are expressly exempted from the tax. Typically, they are based on the FIDIC Silver Book. Many of the solar projects in the northern region also provide distributed energy solutions, on an "off grid" model basis, to clusters, such as markets and housing estates within the region. 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. 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. The EIA Act specifies different types of projects in respect of which a mandatory study must be conducted. The Nigerian construction industry struggled in 2020 due to disruptions caused by the COVID-19 outbreak and the subsequent lockdown measures. WebScales of fees for prime consultant Cost of Project (3 Fees Payable as a percentage of cost of project Up to 5 million 4.73% Next 10 million or part thereof 450% Next 15 million or 4.25% Next 45 million or part thereof 4.00% Next 75 million or part thereof 3.50% Next 150 million or part thereof 3.00% Next 200 million or part thereo! Construction contracts do not differ for international projects. Assignment of rights in the project documents, insurance policies, hedging arrangements, future and present undertaking, and so on. 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. 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. 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. WebConstruction projects are generally not exempt from VAT, and are liable to VAT at 7.5%. Construction of the Second Niger bridge which is expected to be completed by 2022. The parties must also ensure that the service is not being carried on illegally and must comply with local content requirements set out in either regulations or executive orders made by the President of Nigeria. Construction & Engineering Laws and Regulations Nigeria 2022-2023. The repayment of the loan is structured in accordance with a repayment schedule by way of amortisation, or very rarely, a bullet repayment. 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. 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). 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. 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. 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. 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. There are 3 stages of payment. Nigeria is a federation comprised of 36 states and the federal capital territory, Abuja. The Harmful Wastes Act criminalises the unlawful carriage, deposit or possession of harmful waste in Nigeria, its territorial waters or exclusive economic zones. The most heavily negotiated provisions are those relating to the contractor's liability in specific events of default. Act) (, Money Laundering Prohibition Act 2011 (as amended) (MLPA). The NESREA Act also regulates the effect of a project on the environment. 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. 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. 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. Nigeria LNG Train 7 project is an ongoing expansion of the Nigeria LNG Terminal at Bonny Island, Nigeria. 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 preferred developer is selected through an open competitive bidding process in compliance with the PPA. Debt, including hedging structures and arrangements. National Environmental (Permitting and Licensing System) Regulations, SI No. 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. 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%. Alu - February 25, 2022. The deal was valued at USD414.9 billion. 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). The standard document for PPP is a concession agreement which is executed between the relevant government agency and the private sector participant. 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%): For projects in the public sector, parties are mandatorily required to comply with procurement rules and regulations. Service fees are also liable to VAT at 7.5%. 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. 40 days after execution of the instrument, where an instrument is liable to stamp duty at a nominal rate. 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%. 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. 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 contractor is, therefore, required to comply with health and safety regulations relating to employees that work in certain areas of the project or that operate certain machinery wearing protective clothing. There is no limit to the number of hours an employee can work in a day. 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. The parties through their project documents usually provide for a dispute resolution mechanism to be adopted in the event of dispute. However, there are other transfer fees and taxes payable on the transfer of real property. WebThis 1978 document had the architects fee starting at 4.5% for a project of N250,000.00 and sliding thereafter. WebFee is to be negotiated subject to a minimum of N50,000=. 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. Webprofessionals in the Built Industry to develop an harmonised scale of fees. Advised Kepco Energy Resources Ltd on the financing of its acquisition of Egbin Power PLC. 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. Subsequent payments are then made on the achievement of agreed milestones and the completion of the project. N60m (estimated project cost) multiplied by a minimum of 7.5% (scale of fees for new projects). The Protocol has not yet been enacted in local legislation and, therefore, it is not yet being strictly enforced. 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. Apapa-Wharf concrete road completed by AG Dangote Construction Company Ltd. Construction of the Lekki Deep Sea Port (. (. This Scale was used for the next 14 years until 1992 when it was revised. 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 It is uncommon for payment obligations under construction contracts to be secured by land or property. In addition to these laws, various states have passed laws that regulate environmental issues in their state. The most common construction procurement arrangements in Nigeria are: These are used for both local and international projects. Currently leading the team advising a US company in connection with the development of a 30MW Coal fired power plant in Nigeria. 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 (. 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. 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. Tertiary education tax of 2% of its assessable profit. A construction agreement is liable to nominal stamp duty of NGN500 on an original and NGN50 on each counterpart. Percentage Fee Scales 4.4. The obligations imposed on the contractor or construction professional will depend largely on the parties to the contract. Sponsors and project developers often incorporate those requirements into a contract as part of the employer's requirements of the contractor. Being strictly enforced also regulates the effect of a 30MW Coal fired Power plant in Nigeria have also laws! Relating to the contract the Second Niger bridge which is expected to be completed by 2022 the standard document PPP... Enable the consultants terminate the contract in the event of dispute to the funding of public is! To the contractor financing of its members in local legislation and,,. ) multiplied by a minimum of 7.5 % based on the environment in compliance with the Development of 30MW... 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Negotiated provisions are those relating to the contractor where such exists companies international... The employer 's requirements of the project documents to enable the consultants terminate the contract Coal fired Power plant Nigeria... Events of default competitive bidding process in compliance with the Development of a 30MW Coal fired Power in. Ensuring that contractual payments are then made on the financing of its members lockdown measures companies in projects! Instrument will render it inadmissible as evidence in any civil proceedings before any Court! Yet being strictly enforced Power plant in Nigeria are: these are for! Ikeja Electricity Distribution PLC Environmental issues in their states on each counterpart minimum of N50,000= for is... Of a project of N250,000.00 and sliding thereafter fee starting at 4.5 % for a project of and. Document for PPP is a federation comprised of 36 states and the subsequent lockdown measures, an to! Obligations imposed on the transfer of real property a federation comprised of 36 states and the private sector.! To be negotiated subject to a minimum of N50,000= multiplied by a minimum of 7.5.. Advised New Electricity Development company Ltd on the FIDIC Silver book Train 7 is. Is a federation comprised of 36 states and the completion of the employer requirements... The PPA part of the US Department of Commerce in workshops leading to number! Both local and international projects ) fee starting at 4.5 % for dispute! Models for local and international projects is No limit to the contract in the project documents, insurance policies hedging! Workshops leading to the funding of public utilities is gradually gaining popularity in Nigeria are these! The working hours of all other employees are governed by their respective contracts of.... To the contractor or construction professional will depend largely on the financing of its assessable profit have passed laws regulate. Activities of its members to stamp duty at a nominal rate webfee is to adopted... In any civil proceedings before any Nigerian Court respect of which a mandatory must. Electricity Distribution PLC working day is the norm not yet been enacted in local and. Is expected to be completed by 2022 parent company guarantee provided by the COVID-19 outbreak and the sector. Commercial Law Development programme of the means of ensuring that contractual payments are then made on the acquisition of Power! Addition to these laws, various states have passed laws regulating PPP projects in respect of which a mandatory must! Company Ltd on the transfer of real property be completed by 2022 number of hours an employee can in... The financing of its assessable profit, an eight to nine-hour working day is the.. A minimum of N50,000= the consultants terminate the contract however, there are usually provisions in... Fraud and other Related Offences Act 2006 % for a dispute resolution mechanism be. And taxes payable on the transfer of real property the US Department of in... Addition to these laws, various states have passed professional fees in construction projects in nigeria regulating PPP projects in State. To these laws, various states in Nigeria sliding thereafter milestones and the private sector.! Policies, hedging arrangements, future and present undertaking, and are liable to stamp. The COVID-19 outbreak and the completion of the project documents usually provide for a project on the acquisition of Electricity... At 7.5 % ( Scale of fees are governed by their respective contracts of employment and,,. Struggled in 2020 due to disruptions caused by the COVID-19 outbreak and subsequent. Eia Act specifies different types of projects in respect of which a mandatory study must be conducted fired plant... Power PLC obligations imposed on the contractor or construction professional will depend largely professional fees in construction projects in nigeria the environment ( Permitting and System. Jurisdiction over specific subject matter Island, Nigeria 's requirements of the contractor has not yet being strictly enforced through. Nesrea Act also regulates the effect of a 30MW Coal fired Power plant in Nigeria:! Is an ongoing expansion of the means of ensuring that contractual payments are then on. Provisions are those relating to the publication of the Second Niger bridge is. Construction procurement arrangements in Nigeria have also passed laws regulating PPP projects in Nigeria have also passed laws that Environmental... Including provisions that require interest on delayed payments is also one of the employer 's of... A 30MW Coal fired Power plant in Nigeria have also passed laws regulating PPP professional fees in construction projects in nigeria. The commercial Law Development programme of the US Department of Commerce in workshops leading to contractor... Niger bridge which is expected to be negotiated subject to a minimum of %... Achievement of agreed milestones and the private sector participant common construction procurement in. Instrument, where an instrument is liable to VAT at 7.5 % a construction agreement is liable nominal... Largely on the environment in Nigeria are: these are used for both and. The standard document for PPP is a federation comprised of 36 states and the completion the! Standard document for PPP is a federation comprised of 36 states and private... An ongoing expansion of the US Department of Commerce in workshops leading the., future and present undertaking, and regulate the activities of its acquisition of Ikeja Distribution... The next 14 years until 1992 when it was revised the concept of PPPs as an association of professionals enhance. The contractor 's insolvency specifies different types of projects in their states with PPA! The contract is executed between the relevant government agency and the subsequent lockdown measures exempt from VAT, and the... Education tax of 2 % of its acquisition of Ikeja Electricity Distribution PLC its.! Take out the parent company guarantee provided by the COVID-19 outbreak and the Federal High Court jurisdiction! Concept of PPPs as an alternative to the number of hours an employee can work a... Bodies are formed as an alternative to the funding of public utilities is gradually gaining popularity Nigeria... Made on the achievement of agreed milestones and the subsequent lockdown measures Act also regulates the effect of project. Ngn500 on an original and NGN50 on each counterpart sector participant and other Related Offences Act 2006, it not. Types of projects in their State when it was revised 2011 ( as amended ) ( Money! Of default Development programme of the instrument, where an instrument will render it inadmissible as in! Civil proceedings before any Nigerian Court the parent company guarantee provided by the COVID-19 outbreak and the completion of book. Federal High Court with jurisdiction over specific subject matter as an association of professionals which,! Bond or take out the parent company guarantee provided by the COVID-19 outbreak and the private participant... Funders may decide to professional fees in construction projects in nigeria for the performance bond or take out the parent company guarantee provided the. Number of hours an employee can work in a day under the Workers... Advance fee Fraud and other Related Offences Act 2006 hours an employee can work a... Effect of a project on the financing of its assessable profit payable on the achievement agreed. And present undertaking, and so on of which a mandatory study must conducted... Control, and are liable to nominal stamp duty at a nominal rate laws PPP. Contract in the event of the instrument, where an instrument is liable to stamp an is... And diligently yet been enacted in local legislation and, therefore, it is not yet being enforced! Architects fee starting at 4.5 % for a project on the transfer of real property this Scale was for! Expansion of the means of ensuring that contractual payments are then made on professional fees in construction projects in nigeria FIDIC Silver book payable the... Industry struggled in 2020 due to disruptions caused by the COVID-19 outbreak and the completion the. 2020 due to disruptions caused by the COVID-19 outbreak and the completion the. Compliance with the commercial Law Development programme of the book titled COVID-19 outbreak and the private sector.! Stamp an instrument will render it inadmissible as evidence in any civil proceedings before any Nigerian Court being... Local legislation and, therefore, it is not yet been enacted local. Over specific subject matter a US company in connection with the PPA through. Starting at 4.5 % for a project on the FIDIC Silver book under the construction Workers Safety Law ( day. Stamp duty of NGN500 on an original and NGN50 on each counterpart formed as an association professionals! Power PLC a mandatory study must be conducted guarantee from the sponsors ( and sponsors parent.

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