VALUATION FOR COMPENSATION IN NIGERIA

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VALUATION FOR COMPENSATION IN NIGERIA

(A Case Study of 330KVA PHCN Power Line Project, Otukpo, Benue State)

ABSTRACT

This project work looks into the valuation for compensation in Nigeria, a case study of 330 KVA PHCN Power Line Project, Otukpo Benue state. State Government in Nigeria has the power of compulsory acquisition in their respect domain. The provision of the law is also that adequate compensation should be given to those affected by the acquisition. The question is whether the compensation being paid is adequate or not. This work is looking into the adequate of compensation in the acquisition of land for 330kva PHCN power line project, Otukpo. It will identify problems encountered in the process of acquisition and compensation and proffer solutions.  

CHAPTER ONE

1.0     INTRODUCTION

Knowing what an asset is worth and what determines the value is a pre-requisite for intelligent decision in making an investment for a portfolio, in deciding on the appropriate price to pay (compensation) or receive in a takeover, and choosing financing and dividend choices when running a business. The premise of valuation is that, we can make reasonable estimates of value for most assets and that the same fundamental principles. The value of all types of assets, real as well as corporeal. Some assets are easier to value than others, the details of valuation vary from asset to asset and the uncertainty associated with value estimates is different for different assets, but the core principles remain the same.

This introduction lays out some general insights about the valuation and compensation process and outlines the role that valuation plays in portfolio management, acquisition analysis and in corporate finance. It also examines the three basic approaches that can be used to value an asset (Kalulu and Byrne, 2009). There is no land without owner; the ownership may be individual, corporate, communal or national. Everything depends on land, houses are built on land, food comes from land, and the ultimate relationship between man and land is that man’s remains are committed to land after death. Hence, life basic needs are expressed to be food; clothing and shelter are entirely derived from land. Statutory definitions of land in Nigeria include the followings:

Land includes ‘’land and everything attached to the earth and all chattels real’’, further, land includes land of any tenure, building or any parts of building whether the division is horizontal, vertical or made in any other way. Furthermore, the word land is a species of property (Obaseki, 1989). Property has been defined to mean ownership or title of a valuable asset and sometimes the right over which ownership may be exercised. The land comprised in the territory of each state of the federation is the right over which the governor exercised ownership in trust in accordance with section (1) of the land use Act of 1978. It is an immovable property. The land use decree was promulgated on 29th march 1978, following the recommendations of a minority report of a panel appointed by the federal military government of the time to advice on future land policy in each state of the federation.

The decree distinguishes throughout between urban and rural land. In urban areas valuation for compensation is higher compared to rural areas. While in rural, the land use decree fall under the appropriate local government. Land use and allocation committees appointed for each state by the governor were to be advised on the administration of land in urban areas while, land allocation advisory committees were to exercise equivalent functions with regards to rural land.

This project focuses on the provision of the Act, section 28 and section 29 relating to valuation for compensation and acquisition.

1.1     AIM AND OBJECTIVES OF THE STUDY

The aim of this research is to examine the basis of valuation for compensation in Nigeria with reference to 330KVA, PHCN power line project, Otukpo Benue state. However, the following objectives are critical to achieve the aim of this project;

(i)      To know the approaches in place and effectively implemented to ensure that communities and people are placed in at equivalent position to compensate those, before the land acquisition.

(ii)     To examine the stand of the Act as regards valuation for compensation, and arriving at adequate compensation.

(iii)    To make case for adequate compensation.

1.2     STATEMENT OF THE RESEARCH PROBLEM

The problems of valuation for compensation in Nigeria remain unaltered or unchanged if not even compounded by the day because of inadequate measures being taken by the respective organization or authorities to solve these problems. Lack of standard structure by the government to manage compensation in areas acquired for federal projects is alarming inadequacy of competent valuers, surveyors, managers etc. And also lack of genuine and original values of building, farm, land, and reserved areas both private and public buildings.

1.3     BACKGROUND OF THE STUDY

Valuation for compensation in Nigeria is very much prone to challenges as a result of lack of funds. With this, the attitude of average Nigerian valuers towards property valuation is not encouraging.

In an area of depressed economy like Nigeria, coupled with the dramatic decrease in private and public property, valuation is continuously neglected (Olateju, 1990).

The essence of this project writing on valuation for compensation in Nigeria to make detailed survey and plan for the subject property aimed at bettering the condition for valuation of the same. Also to observe, identify the problems and give advice for the proper execution of valuation for compensation anywhere strictly on professional terms. Landed properties generally has been considered as a major issue by both the public and private sectors because of the central position it occupies in the socio-economic development of projects e.g.330KVA, PHCN power line project in the area of case study.

Landed property is generally regarded as a basic human need as it ranks next to food and clothing. Housing, farm land and other land properties are not only a structure but also part of fabric of neighborhood life (Encarta, 2007). For a long time, there has been a miss-conception that the provision of compensation is a social science by either government or private organization. Notwithstanding, good valuation for compensation promotes efficiency of project in the area acquired for project development, contribute to improvements in national productivity improved valuation for compensation for the citizens of any nation contributes greatly to social stability in the society, so also do compensation provide property owners an enhanced comfort and social values in human settlement (Lee, 1976).

1.4     SIGNIFICANCE OF THE STUDY

The relevance of the study is purely on academics and designed to achieve the partial fulfillment of the award of National Diploma in Estate Management, Federal Polytechnic Nasarawa. It will also be importance to the school who may find the report as an important tool in carrying out routine valuation for compensation in the surrounding of expansion is required by the school. It will help to know how to carry out valuation reports and compensation reports in the field of estate surveying and valuation profession.

Finally, the federal polytechnic Nasarawa will find it useful as an additional literature in related books in its libraries and also a further guide for future students in research related subjects.

1.5     SCOPE AND LIMITATION OF THE STUDY

The scope of this research is the adequacy of compensation on the acquisition of properties for the 330KVA, PHCN power line. It is clear that the study will not discuss all but rather be restricted to the valuation for compensation in other to reveal the level, adequacy, justness and equity.

The scope is limited to the power line valuation for compensation 330KVA, PHCN power line project, Otukpo Benue state.

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