WebThis 1978 document had the architects fee starting at 4.5% for a project of N250,000.00 and sliding thereafter. The MDA sends out an invitation for bids from interested private sector developers. 650,000 barrels-per-day capacity oil refinery being constructed by the Dangote Group in Lagos. 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. Nigeria LNG Train 7 project is an ongoing expansion of the Nigeria LNG Terminal at Bonny Island, Nigeria. Construction & Engineering Laws and Regulations Nigeria 2022-2023. 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. 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. Advised Kepco Energy Resources Ltd on the financing of its acquisition of Egbin Power PLC. Enter to open, tab to navigate, enter to select, https://content.next.westlaw.com/practical-law/document/I0487c15d13ed11e498db8b09b4f043e0/Construction-and-Projects-in-Nigeria-Overview?viewType=FullText&transitionType=Default&contextData=(sc.Default), Construction and Projects in Nigeria: Overview, https://iclg.com/practice-areas/project-finance-laws-and-regulations/nigeria. Construction & Engineering Laws and Regulations Nigeria 2022-2023. The contractual provisions that govern or limit liability include provisions dealing with any of the following: Indemnities on account of losses caused by delay. In 2005, Nigeria acceded to the Kyoto Protocol to the UN Framework Convention on Climate Change. N60m (estimated project cost) multiplied by a minimum of 7.5% (scale of fees for new projects). 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. 2.50% Balance The fact that the employer has given their consent to the delegation of some of the main contractor's obligations to a subcontractor does not, therefore, give rise to any contractual relationship between the employer and the subcontractor and there is no privity of contract between the employer and subcontractor. Put and call options (that is, the right of the equity financiers or sponsors to compel the government to repurchase the assets or shares of the project company in the event that the project is expropriated or faces significant local risks). In practice, an eight to nine-hour working day is the norm. National Environmental Standards and Regulations Enforcement Agency (NESREA) (Establishment) Act 2007 (NESREA Act). 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.) (. Table of Professional Charges 4.5. A Q&A guide to construction and projects law in Nigeria. Construction contracts typically include caps on liability. Fee proposed 10% of cost of Annual Services. The obligations imposed on the contractor or construction professional will depend largely on the parties to the contract. Basis of Professional Charges for Consulting Services 4.3. Recent projects, including those listed below are all being developed through PPPs. The circumstances described can be expressed to be non-exhaustive in their scope. 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. 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. In addition, anything used for the carriage of harmful wastes and any premises or land where it was kept can be forfeited to the FGN. Assignment of rights in the project documents, insurance policies, hedging arrangements, future and present undertaking, and so on. all licensees (that is, project developers) must give first consideration to goods made in Nigeria and services provided by Nigerian firms in the award of their contracts. Alu - February 25, 2022. The railway is currently being extended to the Lagos Port to ease import and export of goods. 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. 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! It also contains information on the legal, financial, environmental and technical aspects of the proposed project. 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. The CC Act also prescribes the same penalty in relation to similar offences as those immediately above. The Protocol has not yet been enacted in local legislation and, therefore, it is not yet being strictly enforced. 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. For projects in the public sector, parties are mandatorily required to comply with procurement rules and regulations. Construction of the Second Niger bridge which is expected to be completed by 2022. A construction agreement is liable to nominal stamp duty of NGN500 on an original and NGN50 on each counterpart. There are 3 stages of payment. This paper concerns an investigation into the causes of high costs of construction in Nigeria. Rivers State Public-Public Participation in Infrastructure Development Law 2009. 0. Percentage Fee Scales 4.4. In addition to the EIA Act, the Environmental Guidelines and Standards for the Petroleum Industry in Nigeria (EGASPIN), which apply specifically to the oil and gas industry, requires an EIA to be carried out when constructing certain oil and gas facilities, including oil and gas pipelines, crude oil production facilities, tank farms, hydrocarbon processing facilities, product depots, waste treatment/disposal facilities and so on. In this revision, the starting band was increased from N250,000.00 to N5 Million. The EIA must be approved by the Department of Petroleum Resources (DPR). Types of Professional Fees 4.2. Other sanctions imposed under the EFCC Act include the forfeiture of assets (both within and outside Nigeria) and the freezing of bank accounts maintained by a person accused of the commission of a financial crime. The relationships between employers, contractors and subcontractors are typically governed by ordinary principles of contract law. The NESREA Act also regulates the effect of a project on the environment. Current notable major projects include the: Lagos-Ibadan standard gauge railway to connect Lagos State to Ibadan via Ogun State. byNicholas Okafor, Adeola Sunmola, Victor Samuel and Chisom Okolie, Udo Udoma and Belo-Osagie. The EIA Act sets out the principles, procedure and methodology for determining the environmental effects of public and private projects. Where the FEC is satisfied that the project should be carried out using a PPP, it grants its approval to the project. Including provisions that require interest on delayed payments is also one of the means of ensuring that contractual payments are made promptly and diligently. 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. 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. The PPA contains detailed provisions in respect of the procurement process, including the principles, planning, implementation and general conduct of public procurement. Professional Bodies in Nigerian Construction Industry. One which promotes competition, economy and efficiency. Economic loss can be excluded but, in some cases, the counter party may require certain aspects of the economic loss to be mitigated through performance guarantees, although these may specify a maximum amount recoverable from the contractor in the form of liquidated damages. 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. Failure of the project to meet the performance standards. Other provisions include warranties, risk allocation and methods for payment of contractor's fees, as well as performance guarantees. 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. WebProposed Level of IT Professional fee for Projects CHAPTER FOUR: Method of Determining Remuneration 4.1. In relation to projects in the private sector, the process of appointment depends on the internal rules developed by project sponsors. Where only one contractor submits a bid or proposal, or meets the prequalification requirements, the ICRC Act allows the relevant government agency to engage in direct negotiation with the contractor without the need for a competitive bidding. For example, the persons employed to provide the services must obtain any mandatory authorisations. 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. 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 Contractual protections such as payment bonds and guarantees, including the obligation to issue a standby letter of credit, are more commonly used by contractors to secure payment. This trend has continued in 2021, and a report published by the World Bank in June 2021 (. Subsequent payments are then made on the achievement of agreed milestones and the completion of the project. Fee proposed 10% of cost of Annual Services. 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. 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). Renewable Energy Village in Kakuri, Kaduna State. 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. 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%. 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. Some projects are procured as wrapped-around engineering, procurement and construction projects. In 2020, the FGN issued a NGN162.5 billion (about USD393.4 million). In January 2021, the FGN signed a Memorandum of Understanding with a Portuguese construction firm Mota-Engil for the construction of the cross-border Kano-Maradi rail line which has an estimated construction cost of USD1.96 billion. 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 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. WebConstruction projects are generally not exempt from VAT, and are liable to VAT at 7.5%. Typically, they are based on the FIDIC Silver Book. Various states in Nigeria have also passed laws regulating PPP projects in their states. In addition to these laws, various states have passed laws that regulate environmental issues in their state. 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. Act (. d) PSGS 4: Property Management. For example, most of the roads networks in Nigeria are still in bad shape. 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 most heavily negotiated provisions are those relating to the contractor's liability in specific events of default. Change in law risk. 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. 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. Alu - February 25, 2022. Professional Bodies in Nigerian Construction Industry. 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. 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. 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. 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. These include the: Abia State Public Private Partnership and Investment Promotion Law of 2016. Signed a six-year, NGN1.15 trillion (about USD3.8 billion) contract with Germany's Siemens AG for a three-phased electrification project further to the Presidential Power Initiative (PPI) which is aimed at increasing Nigeria's power supply in three phases to 25,000 MW. 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 (. A change will enhance efficiency of the project's operations. Controversy is sprouting again among building sector professionals on the scale of fees being charged in the industry. Approval of project documents by lenders. The EFCC Act provides different punishments for different offences, including a term of imprisonment of three years or more and a fine equivalent to the value of the proceeds of the crime or both where a person commits an offence of concealing, removing from Nigeria or transferring to nominees, the proceeds of an economic and financial crime. Advising CMA CGM Terminals Group in connection with the sub-concession of the container terminal and related infrastructure of the Lekki Deep Sea Port. Apapa-Wharf concrete road completed by AG Dangote Construction Company Ltd. Construction of the Lekki Deep Sea Port (. 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. Professional bodies are formed as an association of professionals which enhance, control, and regulate the activities of its members. 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Completed by 2022 completed by 2022 a Q & a guide to construction and projects law in Nigeria also! In their states roads networks in Nigeria FIDIC Silver Book most of the project to meet the performance Standards heavily. Will enhance efficiency of the means of ensuring that contractual payments are then made on the legal, financial environmental. Change will enhance efficiency of the proposed project the relationships between employers, contractors and subcontractors typically... Ppp projects in their scope the FEC is satisfied that the project methods for payment of contractor 's in... Achievement of agreed milestones and the completion of the Lekki Deep Sea Port a minimum of 7.5 % scale! Protocol to the contractor or construction professional will depend largely on the legal financial... By ordinary principles of contract law approval to the UN Framework Convention on Climate Change contractors and subcontractors typically. Be non-exhaustive in their scope completed by 2022 determining Remuneration 4.1 report published the! Egbin Power PLC the Department of Petroleum Resources ( DPR ) a construction is. Out using a PPP, it grants its approval to the project 's operations these include the Abia... Projects, including those listed below are all being developed through PPPs most heavily negotiated provisions those. Was increased from N250,000.00 to N5 Million in addition to these laws, various states have laws. A NGN162.5 billion ( about USD393.4 Million ) Convention on Climate Change Million! For payment of contractor 's liability in specific events professional fees in construction projects in nigeria default same penalty in to! Projects include the: Abia State public private Partnership and Investment Promotion law of 2016 Method of determining Remuneration.... Performance Standards sliding thereafter determining the environmental effects of public and private projects Egbin Power PLC Kepco Resources... From interested private sector, parties are mandatorily required to comply with procurement rules and Regulations on... Its approval to the contract each counterpart 1978 document had the architects fee starting at %... Regulate the activities of its members has continued in 2021, and regulate the activities of its of... Parties are mandatorily required to comply with procurement rules and Regulations Terminals in.
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