The outline business case contains information on the proposed structure of the project, the procurement process for awarding the contract as well as the resources to be used in implementing the project. Alu - February 25, 2022. WebThis 1978 document had the architects fee starting at 4.5% for a project of N250,000.00 and sliding thereafter. 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. 0. 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). The continuing expansion of Nigeria's middle class has made investments in condominiums and shopping malls a popular choice for private capital. During 2020 and 2021, parties have increasingly sought to declare force majeure events caused by COVID-19. 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 This can be mitigated by seeking assurances from the government on the basis of attracting foreign investment or undertaking projects in conjunction with multilateral agencies. 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. Nigeria LNG Train 7 project is an ongoing expansion of the Nigeria LNG Terminal at Bonny Island, Nigeria. In many cases, the project company is a joint venture entity between a local sponsor and a foreign entity that will provide technical or management services to the project. Legal or equitable mortgage on all of the project company's interest in the project site, land and buildings and fixed plant and machinery. 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. The contractual provisions that govern or limit liability include provisions dealing with any of the following: Indemnities on account of losses caused by delay. Typically, they are based on the FIDIC Silver Book. Professional Bodies in Nigerian Construction Industry. 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. Improving power supply reliability to meet growing demand. There is also professional indemnity insurance which provides for cover against any liability for any damages arising due to professional negligence on the part of the professionals working on a construction project. WebThis 1978 document had the architects fee starting at 4.5% for a project of N250,000.00 and sliding thereafter. The Labour Act provides that normal work hours are to be fixed by mutual agreement, collective bargaining, or by an industrial wages board. These include airport, infrastructure, mining, railway, power generation and transmission, petroleum, waste treatment and disposal projects. Advance Fee Fraud and Other Related Offences Act 2006. WebFee is to be negotiated subject to a minimum of N50,000=. The EIA must be approved by the Department of Petroleum Resources (DPR). 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. However, Nigeria currently builds just 2,000 houses per year. State governments have also embarked on projects aimed at providing affordable housing for citizens. 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. f) PSGS 6: Letting/Real Estate Brokerage/Agency. Both equity and debt financing will typically be used in the same project usually at a ratio of 70% debt to 30% equity. 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. d) PSGS 4: Property Management. In other cases, the overall cap does not exceed the amount of the contract price. 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. 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. There are various mechanisms available to Nigerian companies for mitigating taxes, depending on the nature of the transaction and the project. 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 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 addition, anything used for the carriage of harmful wastes and any premises or land where it was kept can be forfeited to the FGN. In most contracts for the construction of process plants, liability is usually capped at 25% of the contract price. There is also no compulsory levy to fund local infrastructure. 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 (. 19, 2009. 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 Advising CMA CGM Terminals Group in connection with the sub-concession of the container terminal and related infrastructure of the Lekki Deep Sea Port. 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: In Lagos State, under the Construction Workers Safety Law (. The parties through their project documents usually provide for a dispute resolution mechanism to be adopted in the event of dispute. 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. National Environmental (Electrical/Electronic Sector) Regulations, SI No. Failure to stamp an instrument will render it inadmissible as evidence in any civil proceedings before any Nigerian court. WebProposed Level of IT Professional fee for Projects CHAPTER FOUR: Method of Determining Remuneration 4.1. Percentage Fee Scales 4.4. 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. Types of Professional Fees 4.2. 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). The company would also be liable to pay other applicable taxes and to make contributions to various funds such as the industrial training fund, employee compensation fund, and pension fund. However, engineering, procurement and construction contracts typically include a payment schedule. The provisions that commonly govern contract variations are those that regulate issuing change orders or additional work. Implementing clear policies that promote and encourage investor confidence in the sector. 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. 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. In addition, parties can execute a direct agreement with the third party which will contain terms such as step-in rights provisions to enable the third party step in and assume the obligations and rights of the project sponsor under the contract where a certain agreed event occurs. 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. 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. There are other non-compulsory insurance products, such as erection all risk insurance, that a contractor or project company will typically procure. 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. 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. f) PSGS 6: Letting/Real Estate Brokerage/Agency. On 16 August 2021, the President signed the long awaited Petroleum Industry Bill into law. This is broken down into. 2.50% Balance 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 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. Fee proposed is 10% of Gross Rent Payable, or Gross Proceeds of Sale/Purchase. One which promotes competition, economy and efficiency. 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. However, in international projects, the project company is usually wholly owned by the sponsors through a holding company incorporated in a tax-friendly jurisdiction. However, Nigerian courts would be unwilling to enforce clauses limiting liability for all or any of the following: There are no laws in Nigeria that stipulate standard forms or construction process or restrict parties' ability to enter into architectural, design & consulting contracts. 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! 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). The EGASPIN provides for the following processes: Environmental screening to be carried out during concept selection studies. Service fees are also liable to VAT at 7.5%. 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. Construction & Engineering Laws and Regulations Nigeria 2022-2023. 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 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). Most construction contracts contain step-in right provisions that impose an obligation on the contractor to assign the subcontract to the employer in certain circumstances, for example, if the main contract is terminated. Various states in Nigeria have also passed laws regulating PPP projects in their states. There is currently no VAT on the transfer of real property in Nigeria. Basis of Professional Charges for Consulting Services 4.3. 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. 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. Arbitration is either ad hoc or institutional. 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 (. Construction & Engineering Laws and Regulations Nigeria 2022-2023. 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. 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. There is no specific law on how construction disputes should be resolved in Nigeria. The proposed project is submitted to the Federal Executive Council (FEC) for approval. 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. 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. 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. 650,000 barrels-per-day capacity oil refinery being constructed by the Dangote Group in Lagos. With regard to construction contracts (local or international), where parties have agreed to submit their disputes to Nigerian courts, most of the cases are filed in the state high courts. Assignment of rights in the project documents, insurance policies, hedging arrangements, future and present undertaking, and so on. The Pension Reform Act 2014 imposes an obligation on employers to obtain life insurance cover for all their employees. Advised Actis on its investment in the 459 MW Azura-Edo gas fired independent power plant in Edo State. Cost is a vital element in every development. Subsequent payments are then made on the achievement of agreed milestones and the completion of the project. Where the FEC is satisfied that the project should be carried out using a PPP, it grants its approval to the project. 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). The CC Act also prescribes the same penalty in relation to similar offences as those immediately above. Professional bodies are formed as an association of professionals which enhance, control, and regulate the activities of its members. However, where the owner of the land disposes of it, any gains realised will be liable to capital gains tax at 10%. d) PSGS 4: Property Management. Introduced policies aimed at improving rural electrification through the Rural Electrification Strategy and Implementation Plan (RESIP), under which the Board of the Rural Electrification Agency (REA) Board was constituted. The Nigerian Institute of Architects (NIA) was founded in 1960 as an association of. However, by law, parties are unable to cap liability arising from death and personal injury. Percentage Fee Scales 4.4. In 2020, the FGN issued a NGN162.5 billion (about USD393.4 million). Other states such as Delta, Ebonyi, Enugu, Edo, Ekiti, Gombe and the Federal Capital Territory (FCT) have all commenced affordable housing projects. Webprofessionals in the Built Industry to develop an harmonised scale of fees. The Abuja Metro Rail, the Abuja-Kaduna Rail and the 327 kilometre Itakpe-Ajaokuta-Warri Rail projects were completed in 2020. There are 3 stages of payment. Other provisions include warranties, risk allocation and methods for payment of contractor's fees, as well as performance guarantees. 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. There are no prescribed methods of payment for construction work in Nigeria, as a result, the payment method to be adopted is usually a subject of negotiation between the parties and can be influenced by the nature of the project. 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. A change will enhance efficiency of the project's operations. 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. In this revision, the starting band was increased from N250,000.00 to N5 Million. The structures explained above also apply to international projects. The health and safety laws applicable to construction projects include the: for an individual offender, a fine of NGN100,000 or imprisonment for up to five years; for a corporate body offender, a fine of between NGN50,000 and NGN1 million. There is no limit to the number of hours an employee can work in a day. 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. The Harmful Wastes Act criminalises the unlawful carriage, deposit or possession of harmful waste in Nigeria, its territorial waters or exclusive economic zones. This Scale was used for the next 14 years until 1992 when it was revised. On its investment in the Sector billion ( about USD393.4 million ) liability. 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