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Dangote scores another major ‘tax free’ contract



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With the award of the Apapa-Oworonsoki Expressway to the AG Dangote, a joint venture company by the Dangote Group and AG of Brazil, Aliko Dangote has again attracted trillions worth of investment, leveraging on the personality of its owner and Africa’s richest man, Aliko Dangote.

As part of the agreement, the company will be granted a 10 year tax holiday. With the relief, the group is exempted from taxes that could run into trillions of Naira, just by financing the project.

Briefing journalist recently on the agreement, Minister of Works, Power and Housing, Babatunde Fashola Fashola said the tax incentive will help reduced cost of production on its part.

Recall that In June, the federal government signed a N4.34 billion memorandum of understanding on the road to be paid for by Flour Mills of Nigeria, AG Dangote Construction Company Ltd and the Nigerian Ports Authority.

Some analysts in support of the move posit that roads constructed with cement have less wear and tear, compared to asphalt and could thus save the government billions of Naira that would have been used for remedial work over time.

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Also, using cement for road construction provides an additional source of revenue for cement producers in the country, especially the Dangote Group which stands to gain significantly from whatever synergy this contract could provide.

Cement sales also tend to drop during the rainy season, as construction activities are put on hold. Constructing a Federal road with cement, will also encourage other arms of government to use the same model.

The Apapa Expressway is a major road as it leads to the Apapa port, which is the biggest port in the country. The government has struggled to finance key infrastructure projects, due to a drop in crude oil revenue.

AG Dangote (the construction arm of the Dangote Group) is a joint venture between Andrade-Gutierrez of Brazil and the Dangote Group. AG was founded in 1948 in Brazil, and is one of the biggest construction firms in the country.

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