FG Reserves Road Contracts Under N20 Billion for Local Firms

The Federal Government has introduced a new directive that reserves all Nigerian National Petroleum Company Limited (NNPCL) Tax Credit road contracts valued below N20 billion exclusively for indigenous contractors. This means that expatriate construction firms will no longer be allowed to handle projects within this financial threshold. The decision, announced by the Minister of Works, David Umahi, during an inspection tour of the East-West Road in Rivers State, is part of the government’s “Nigeria First” initiative aimed at strengthening local participation in infrastructure delivery.

The “Nigeria First” policy is designed to give local firms a greater share in road construction and maintenance projects across the country. For years, expatriate contractors have dominated many of Nigeria’s major road projects, often sidelining smaller local firms that have the technical ability but lack the opportunity. With this new policy, the government hopes to boost local capacity, create jobs, and keep more of the economic value of road contracts within Nigeria.

Umahi explained that the directive was part of a broader effort to ensure sustainability in funding and execution of projects previously financed by the NNPCL under the Road Infrastructure Development and Refurbishment Investment Tax Credit Scheme. Although the NNPCL stopped direct funding of the scheme on August 1, 2025, President Bola Ahmed Tinubu ordered that ongoing projects must not be abandoned. To achieve this, the Ministry of Works has compiled a list of inherited projects and prioritized them, especially those located along strategic economic corridors that are vital to trade, industry, and the free movement of goods and people.

The minister emphasized that this directive does not mean lowering standards or tolerating poor performance from indigenous contractors. On the contrary, he warned that any lapses in workmanship or quality would be met with strong sanctions. He specifically mentioned that contractors who cut corners by leaving binder courses unprotected or ignoring essential steps in road construction would face consequences, including possible referral to anti-graft agencies. The government is determined to ensure that every project, whether handled by local or international firms, meets acceptable standards of quality and durability.

During his inspection of the Eleme–Onne Road project in Rivers State, which is being executed by Reynolds Construction Company, Umahi expressed mixed feelings. He praised the quality of the work done so far but criticized the slow pace of execution. He reminded the contractors that the December 15, 2025, completion deadline was final, with no possibility of an extension or cost variation. According to him, Nigerians have endured long years of hardship on this critical road and further delays will not be tolerated.

His visit also included inspections of sections of the Enugu–Port Harcourt Expressway, which are being handled by China Civil Engineering Construction Company (CCECC) and Arab Contractors, as well as other stretches of the East-West Road. While foreign contractors are still handling larger projects above the N20 billion threshold, the minister’s directive makes it clear that the government is determined to open more opportunities for local companies and reduce over-dependence on expatriates.

The background to this policy shift lies in the suspension of NNPCL funding for road projects. On August 1, 2025, the NNPCL halted its financial contributions to the Tax Credit Scheme, leaving about N3 trillion worth of projects hanging nationwide. Without fresh funding, there was a real risk of many projects being abandoned mid-construction, which would not only waste resources already invested but also worsen Nigeria’s already fragile road infrastructure. To prevent this, President Tinubu directed the Ministry of Works to adopt a prioritization framework. The idea is to focus limited available resources on critical projects along major economic corridors while also seeking new funding models such as Public-Private Partnerships.

Umahi revealed that the government is currently considering such partnerships to fill the funding gap. Under this arrangement, private sector investors would finance the construction or rehabilitation of roads in return for concessions or other forms of compensation over time. However, priority will be given to contractors that can demonstrate strong financial strength and technical competence. The government’s goal is to ensure continuity, speed, and quality in road delivery, while at the same time encouraging more sustainable investment in infrastructure.

For many Nigerians, this new directive is a welcome development. Local contractors have long complained about being overlooked for major projects, even when they have the capacity to deliver. By restricting contracts below N20 billion to indigenous firms, the government is providing an avenue for smaller and medium-sized contractors to participate in nation-building. This not only strengthens the domestic construction industry but also creates jobs and boosts the economy through local procurement of materials and services.

Critics, however, caution that the government must carefully monitor the performance of local contractors to ensure they can deliver on time and at the expected quality. Past experiences with some indigenous firms have raised concerns about capacity gaps and delays. This is why Umahi’s strong warning on quality and deadlines is critical. If well implemented, the new policy could serve as a balancing act, giving local firms opportunities while also holding them accountable to the same standards applied to international contractors.

As Nigeria continues to face enormous infrastructure challenges, the importance of roads cannot be overstated. Roads connect farms to markets, factories to consumers, and cities to rural communities. They are essential for economic growth, security, and national integration. The government’s decision to prioritize indigenous participation in road contracts reflects an understanding that infrastructure development should not only be about building roads but also about building local capacity and empowering Nigerians.

The coming months will reveal how effectively this directive is implemented. If local contractors rise to the challenge, Nigeria could witness a new era where domestic companies play a central role in delivering critical infrastructure. On the other hand, if the standards of quality and timeliness are not enforced, the policy may fall short of its lofty ambitions. What is clear, however, is that the Federal Government is making a deliberate shift to put Nigerians at the center of Nigeria’s infrastructure story.