TheCable

The federal government has provided clarification on the recent memorandum of understanding (MoU) signed between the ministry of transportation and MPH Rail Development Limited — a construction firm based in the United Kingdom (UK).

The ministry had on March 13, announced that it signed an MoU with the UK firm for the design, construction, operation, and transfer of the Port Harcourt-Enugu-Calabar-Abuja single gauge rail line on a public-private partnership basis.

The news was, however, received with displeasure, as social media users criticised the ministry for signing an MoU with a company whose construction history is unknown.

Providing clarifications on Sunday, the ministry, in a statement signed by Olujimi Oyetomi, its director of press and public relations, said the MoU is still at the preliminary stage.

According to the transport agency, the agreement is meant to provide a platform for further discussion between parties to ascertain the possibility of executing the project or otherwise.

The ministry urged the public to frown on the insinuations cast on the said MoU, noting that it is neither a legal agreement nor a binding commitment on the federal government.

“MOU is a non-binding agreement that states each party’s intentions to take action, conduct a business transaction, or form a new partnership,” the statement reads.

“It is not a legally binding agreement. It provides only a platform for further engagement, discussion, scrutiny, and the provision of required guarantees by the parties to reach an agreement if the parties are satisfied.

“The MoU in question arose from an unsolicited proposal presented by the British African Business Alliance (BABA), an association based in the United Kingdom with interest in business in Africa.

“Its proposal was initially submitted to the ministry on 27th August, 2019. As required, the proposal (outline business case) was submitted to the Infrastructure Concession and Regulatory Commission (ICRC) on 8th December, 2023.”

‘MOU TO PROVIDE PRIVATE FUNDING, NO LOANS’

Speaking further, Oyetomi said the major attraction of the proposal is BABA and MPH’s initiative is to achieve 100 percent private sector funding for the project “with no loans or debt to the Nigerian government or any of its agencies”, as captured in Article 3.3 of the MoU.

“The regulatory commission on 27th December, 2023 granted approval and issued a conditional OBC Certification. It is pertinent to note at this juncture, that COVID-19 was a major contributor to the time lag between initial proposal and the ICRC OBC certification,” he added.

“MPH Rail Development (UK), is the company incorporated by BABA, as the Special Purpose Vehicle (SPV) to ‘deliver’ the project.

“It must be emphasized that a company to be used for such a purpose is usually new with nominal shareholding to allow for stakeholding by parties to the project at the investment stage.

“For the avoidance of doubt the following are the major terms of the MoU, the primary purpose of the MOU, is to provide a platform for further discussion between parties to ascertain the possibility of executing the project or otherwise. It does not create a legal or contractual agreement neither did it commit the federal government in any way.”

On the agreement, the ministry said a fundamental deliverable is for MPH to design a funding and implementation model and submit same to the ministry within 90 days of the MoU for further consideration and scrutiny.

“MPH, within the above-stated 90 days period will equally submit its Programme of Action to demonstrate its achievement of all the preconditions highlighted by ICRC, before further engagement with government,” the ministry said.

“The MoU also sets up a bilateral technical committee to monitor the Company’s commitment towards achieving the above milestones and ensuring that the project objectives are well within sight.”

‘DECISION TO BE MADE AFTER SUBMISSION OF DOCUMENTS’

According to the ministry, MPH is expected to submit (within 90 days of signing the MoU) evidence of commitment by potential financiers, environmental and social impact assessment report, financial model and programme of action, a full business case study report, and a comprehensive feasibility study report.

“It is the submission of the above listed documents and the outcome of their evaluation that will determine the desirability or otherwise of the proposal,” the transport agency said.

“ICRC as the regulator of PPP is fully and duly in charge of the oversight of this process.

“The MoU therefore constitute only the beginning of a long process that will lead to the project after due diligence and scrutiny by the ministry and other appropriate authorities.

“The nascent and nominal share value of the SPV company (Messrs. MPH Rail Development) does not diminish the plausibility of the business proposal at this early stage.”

The ministry, therefore, assured Nigerians that it is committed to discharging its statutory mandate towards delivering efficient, affordable and sustainable transport infrastructure for the country with utmost diligence and fidelity.