Osun Govt’s Claims of N900m Unpaid Tax Against MTN Unsubstantiated

Osun State Government, through its consultant, Global Transaction Nigeria Limited (GTNL), has been making unsubstantiated claims of outstanding tax obligations due, and requests that they be paid through the consultant.

Our Investigation has shown that MTN has settled its RoW fees to Odua Infraco based on binding RoW contract between Osun State and Oodua.

According to a document sighted by our reporter, the claim by osun state government is therefore baseless and unfounded since documents on ground has shown that the telco paid the state government through its consultant, in this case Odua Infraco.

If there is an attempt by Osun State government to severe ties with Odua Infraco, this shouldn’t impact existing agreement with RoW right holders (Odua and Osun should resolve their differences in the overall interest of ease of doing business).

During the period referenced, MTN legally partnered with the Odua Investment Company – in which the Osun State government has a significant shareholding, to lay cable in their fibre ducts in the state. This was based on the documented existing right of way approvals for Odua’s ducts provided by the Osun State Ministry of Innovation, Science and Technology.

The actual dispute is between Osun State government and Odua Infraco over the right-of-way (RoW) fees for fibre infrastructure deployment. Odua Infraco has the right of way for 1031.44 kilometres across four states (Osun, Oyo, Ondo and Ekiti States) for the construction and operation of fibre infrastructure, for which MTN executed an IRU with Odua.

The relationship between Odua and the Osun State government is governed by a May 2023 Right of Way & Easement Agreement. MTN demanded an additional letter of no objection from Odua for the transaction. However, it appears the state government is no longer interested in the relationship with Odua following the state’s appointment of Global Transaction Nigeria Limited (GTNL) as a consultant on telecommunications infrastructure and the alleged termination of the agreement with Odua.

Ignoring the existing agreement with Odua, the state government, via a letter dated 19th April 2024 (from the Special Adviser on legal matters to the Governor) demanded for the payment of N945,000,000 as Right of Way (RoW) fees for 270KMs of fibre optic and a penalty fee of N100,000,000 for the alleged non-payment of RoW. Meanwhile, the RoW is already covered under MTN’s existing agreement with Odua.

Almost universally, Nigerian state governments have acknowledged the importance of affordable right of way charges to enable the growth and development of an inclusive digital economy.

Actions taken by MTN to settle the matter

Engaged and met with members of the Executive Council of Osun State (Commissioners for Finance & Environment & Sanitation and the Attorney General) to amicably resolve the issue. However, all efforts have not yielded the desired result.

Advised Odua to settle its disagreement with the state government.

MTN has suspended all payments to Odua until the matter is resolved.

Sought the NCC’s intervention following a complaint filed with the NCC by the GTNL.

Pertinent issues

Should consultants be mandated to collect tax revenue directly on behalf of government as opposed to receiving payments directly from government?

A modern and dynamic economy rides off low-cost telecoms infrastructure. State governments seeking to charge exhorbitant right of way fees simply put more pressure on customer pricing;

⁠Progressive state governments have waived RoW fees entirely in recognition of the economic and social benefits of affordable digital and data access.

Osun State government has provided documented right of way to MTN partners, but now wants to charge additional fees for the period in which that RoW approval was granted.

The Odua investment company, which was granted RoW by the Osun State Government and partnered with MTN, is partly owned by the Osun State Government and there is no need for this level of aggression.