Kaduna Residents Continue To Battle Elrufai’s Borehole Tax, Threatened With Litigation

Secrets Reporters

A resident of Sabo area of Kaduna State has been issued a notice by the Kaduna State Water Corporation (KADSWAC), requiring borehole owners to pay monthly royalties or risk legal action.

The invoice, obtained by SecretsReporters, details charges of N700 for domestic boreholes, N7,000 for commercial and public building boreholes, and N28,000 for industrial boreholes. However, the document lacks a specific date of issuance, raising questions about its validity and timing.

The demand notice, signed by “Borehole Royalty Managers,” claims that KADSWAC authorized the collection under the provisions of the Kaduna State Water Supply and Sanitation Law, 2016. It further warns that defaulters will face lawsuits as stipulated under the Kaduna State Law Act Regulations 2020.

A portion of the demand notice reads: “In the event of your failure/refusal to pay as when due, we shall explore all means, and a lawsuit shall be instituted against you…”

The document directs payments to specific bank accounts and provides contact details for inquiries. However, many residents view the policy as an exploitative attempt to monetize privately-funded boreholes, often constructed due to the lack of reliable public water infrastructure. They are appealing to the current administration of governor Uba Sani whose tenure started in May 2023, to discontinue the boreholes royalty tax initiated by the administration of Nasir El-Rufai, the immediate past governor of the state.

According to the invoice, the royalty payment scheme is managed by Northpoint Ideal Concept Ltd, a private company incorporated in Birnin-Kebbi on February 26, 2014, with registration number RC 1173627. The company specializes in general merchandising and trading, with Kasim Muhammad Ka’oje and Ubale Kabir Sidi listed as directors.

Further investigation by SecretsReporters raised concerns about the company’s tax compliance. Under the Kaduna State Public Procurement Law, 2016, Section 35(7)(d) states that any company eligible for government contracts must “have fulfilled all its obligations to pay taxes, pensions, and social security contributions.” However, checks revealed that Northpoint Ideal Concept Ltd is not active in payment of tax according to the record with Corporate Affairs Commission (CAC).

This situation raises the question of how a company engaging in tax evasion could be in charge of collection water tax from residents of Kaduna. The controversy raises questions about tax evasion and legal compliance by Northpoint Ideal Concept Ltd and the transparency of KADSWAC’s revenue collection process.

According to Nigeria’s Companies Income Tax Act (CITA), Section 55, all companies are required to file annual tax returns, and non-compliance can attract penalties, including fines and possible suspension of business operations.

When contacted for clarification, a representative of the Borehole Royalty Managers stated that the fees were based on an existing law and that their role was limited to managing the collection. The representative declined to explain the rationale behind taxing borehole owners who financed the construction themselves.

In an attempt to gather further information, SecretsReporters reached out to Tijjani, an official at the Kaduna State Water Board. Tijjani dismissed the inquiries, stating, “The borehole royalty affects only the residents of Kaduna State and should not concern the correspondent.” He further refused to clarify the date of issuance on the invoice, citing no obligation to provide the information unless the reporter identified themselves at the board’s office.

Residents have decried the policy as unjust and exploitative. “This is outrageous. How can the government charge us for something we funded ourselves? It’s their failure to provide water that forced us to dig boreholes,” lamented a Kaduna-based resident, who chose to remain anonymous.

However, another resident, Joshua, who spoke with SecretsReporters said that such payment does not exist anymore in his own area of Kaduna. He added that it could be an area based scheme and that he only heard about it when El-Rufai was the governor and that he is yet to see anything of such in the current administration.

SecretsReporters could not ascertain the exact period the invoice seen was issued, but Tijjani of water board and two representatives of the managing company did not deny the existence of the royalty payment. 

The lack of public sensitization and the ambiguous legal basis for the charges have further fueled discontent. One could argue that the government should prioritize fixing the state’s water supply infrastructure rather than penalizing individuals for self-reliance.

Kaduna residents are calling for an immediate review of the policy and a public clarification from the state government to address their concerns.