Paul Osaji
For improved revenue generation and reporting of plant/machinery valuation in Nigeria, authorities have been challenged to explore the service of those who are professionally qualify in asset estimation exercises.
Chairman, Faculty of Housing of the Nigerian Institution of Estate Surveyors and Valuers, (NIESV), Paul Osaji made this known in Lagos. He said although, the services of lawyers, accountants among others may be needed in other ancillary areas, but not in the nitty-gritty of plant valuation, estate surveyors and valuers are the most qualified for the service.
According to him, the scope of valuer include; complete understanding of valuation purpose, collection of data and documents/understanding, physical inspection of subject assets, market survey and collection of data pertinent to the valuation exercise which resides within the competence of qualified members of NIESV.
“If Nigerian government can take cue from the developed countries who are reaping humongous revenue from taxes on plants and machinery, going cap in hand to Abuja, or waiting on State governments by the local governments would be a thing of the past, as every state and local government would get more than they expected if they engage the services of the estate surveyors and valuers”.
Osaji, who is also the Managing Partner Paul Osaji and Company, lamented that Nigerian governments pay little attention to plant and machinery valuation, which is a veritable revenue source that has been less, exploited in recent times.
“Simply because of over-dependence on non-qualified professionals, who are neither estate surveyors nor valuers and with this situation governments at the three tiers are loosing enormously, revenue that should come from taxes on machinery and plants.
With proper valuation of industrial machinery and plants, be it the breweries, aviation, communication outfits taxes that would be generated either by the federal, state or local governments in term of revenues are so huge that their effective exploitation is capable of eliminating total dependence on revenue from oil, not to talk of engaging in external borrowing”.
He said plant and machinery valuation is stated under the non-current asset and was normally reported by the accountants on two basis, eithver historical cost or revaluation basis but, as a matter of fact, independent valuers must be employed to provide the current, up to date valuation on the non-current assets valuation such as; property, plant, equipment and intangible assets.
“This is where Nigerian governments are getting it wrong by just appointing anybody from any professional background to do the job they know nothing about. Property valuations form important aspects of modern economy. They support the banking system by setting the benchmarks for collateral values. In the corporate sector, property valuations are important inputs in balance sheets and property assets are sought after for business loans.
Property valuations are also important for the ordinary layman when they buy, sell or rent houses and other types of properties. It should be carried out with higher level of integrity and professional competence”, he explained.
For him, plant valuation is highly complex in nature as the practice caters to a wide spectrum of industries with each having plant and machinery with its own inherent characteristics. He disclosed that among the issues to be considered in the plant valuation are the specific utility or usefulness of industrial property, its contribution to the production of goods and services for which it is designed and deployed.
Speaking on the role of international financial standards in valuation process, he said emerging demands from national and international companies, which Nigeria is not excluded, has made financial institutions and other organisations for current valuations to reflect the importance of asset values in new issues for shares (share prospectuses), acquisitions, mergers, takeovers, and as a basis for loans have been one of the factors for the formation of the International Valuation Standard Committee (IVSC).
“Plant and equipment assets have characteristics that distinguish them from the land and buildings in or on which they are located and that influence both the approach to and reporting of their value. Plant and equipment assets are normally capable of being moved or relocated without significant damage or disruption to the land or buildings, and usually will have a company directors that a consistent basis of valuation is used, to enable valid comparisons to be drawn, for the valuation of fixed assets throughout the world”, he stated.
