FRAMEWORK FOR THE REGULATION OF PROJECT FINANCING IN NIGERIA
Generally, there is no specific law that applies to Project financing exclusively in Nigeria. However, transactions relating to project finance are governed by the law of contract, company law, and case law. There are also agencies that regulate project financing and project financing-related transactions, and some are discussed below.
1. The Infrastructure Concession Regulatory Commission (ICRC): It is the main regulatory agency responsible for promoting and regulating public-private partnerships (PPPs) and private sector participation in the development of infrastructure projects in Nigeria. With regulating public-private partnerships serving as the bedrock of project financing in Nigeria, the ICRC serves as the major administrative and institutional regulation of project financing in Nigeria. Its duties include Regulatory Oversight, Project Appraisal and Approval, Capacity Building, Project Monitoring and Compliance, Policy Advocacy and Promotion of Investment.
2. Companies and Allied Matters Act and the Investment and Securities Act: Project financing involves companies and investments and the Act that governs both the Companies and Allied Matters Act and the Investment and Securities Act, are essential in the regulation of project financing. While the Companies and Allied Matters Act regulates the investment companies or the companies responsible for the implementation of the project, the Investment and Securities Act regulates the investment and investment procedure.
3. Securities and Exchange Commission (SEC): It is a regulatory body governed by the Investment and Securities Act, which regulates capital market activities, including project financing.
4. Central Bank of Nigeria (CBN): It generally regulates foreign exchange transactions and monetary policies that relate to project financing.
5. Central Bank of Nigeria (CBN) Regulations: The CBN issues regulations related to foreign exchange controls, which can affect the repatriation of project profits and the ability to obtain foreign currency for project expenses.
6. Taxation Laws: These laws include the Companies Income Tax Act, Value Added Tax Act, and Personal Income Tax Act which can impact project financing as individuals and companies are involved in project financing and liable to pay tax.
7. Federal Inland Revenue Service: This is the body responsible for tax administration and it regulates taxes relating to project financing. The tax treatment of project financing can, however, vary depending on the nature of the project and the tax incentives available.
8. National Electricity Regulatory Commission (NERC) Regulations: For power projects, the NERC regulations play a crucial role in the projects related to the power sector, including licensing, tariffs, and compliance requirements.
9. Petroleum Industry Act (PIA): enacted in 2021, it provides regulations for the oil and gas sector, including provisions related to project financing, taxation, and local content development.
10. Land Use Act: This act is responsible for regulating land ownership and use in Nigeria as it relates to projects that require land acquisition or usage rights.
11. National Environmental Standards and Regulations Enforcement Agency (NESREA) Act: established the National Environmental Standards and Regulations Enforcement Agency, the body responsible for enforcing environmental regulations in Nigeria. Project financing must comply with environmental laws.