The Nigerian National Petroleum Company Limited (NNPCL) has reportedly deducted a total of $525.09 million from its remittances to the Federal Inland Revenue Service (FIRS) under the Road Infrastructure Tax Credit Scheme (RITCS). The deductions, made between February and November 2024, were intended to fund critical road projects but have sparked concerns among state representatives.
A report from a Federation Account Allocation Committee (FAAC) Post-Mortem Sub-Committee meeting held in January 2025 and obtained by Hobnob News reveals that NNPCL consistently deducted $52.51 million per month from payments due to FIRS for Joint Venture Gas and Company Income Tax (CIT) throughout 2024.
Breakdown of the Deductions
The RITCS allows private companies to invest in public road infrastructure and recover their costs through tax offsets. According to the report, NNPCL leveraged this initiative to deduct over half a billion dollars by the end of 2024.
The document states: “Members may recall that the Sub-Committee reported that NNPCL had made deductions in respect of the Road Infrastructure Tax Credit Scheme from the amount due to FIRS for JV Gas and CIT taxes. As of November 2024, a total sum of $525,094,842.80 had been deducted.”
State Governments Challenge NNPCL’s Deductions
Despite the intended benefits of the tax credit scheme, state representatives at FAAC meetings have repeatedly raised objections to these deductions. They argue that road construction falls under the Federal Government’s responsibility and that NNPCL’s approach has financial implications for sub-national entities.
At an FAAC plenary session held in Bauchi in August 2024, members called for an immediate halt to the deductions. They insisted that the revenue allocation formula should be applied so that states receive their rightful share of the funds deducted. Additionally, they demanded a refund of their portion of the deductions based on the existing revenue-sharing structure.
To further address the concerns, the Chairman of the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) officially requested FIRS to provide a detailed breakdown of the tax credits granted to NNPCL and other corporate entities under the scheme.
The report notes: “The sub-national position remains that road construction is the duty of the Federal Government. Therefore, the states’ share of the deducted funds should be calculated and refunded accordingly. To resolve this matter, the Chairman of the Commission wrote to the FIRS, seeking clarity on the tax credits granted to NNPCL and other participating companies. The Sub-Committee awaits FIRS’s response.”
The Road Infrastructure Tax Credit Scheme and Its Implications
The RITCS was introduced to facilitate private-sector investment in major road projects, allowing companies with substantial tax liabilities to construct infrastructure in exchange for tax relief. The program was notably used to fund the completion of the 32-kilometer Apapa-Oshodi-Oworonshoki-Ojota Expressway in Lagos.
In 2023, the Federal Government approved N1.535 trillion for the second phase of the NNPCL-led tax credit scheme, with the company projecting an overall expenditure of N1.9 trillion for infrastructure development under the initiative.
While the scheme has contributed to improving road networks, concerns persist about transparency, accountability, and the impact on federal revenue distribution. As stakeholders await a response from FIRS, the debate over NNPCL’s tax credit deductions remains a contentious issue within Nigeria’s fiscal management landscape.
