Transport Ministry back tracks on agreement with UK firm on rail project

The Federal Ministry of Transport has said the Memorandum of Understanding, MoU, signed with UK company MPH Rail Development for the proposed Port Harcourt-Calabar-Enugu-Abuja standard gauge rail project was not legally binding and is still being reviewed.

A statement by the ministry’s Director, Press and Public Relations, Olujimi Oyetomi, explained that the MoU signed on 12th February 2024 by the Minister of Transportation, Senator Said Alkali on behalf of the Ministry, was to provide a platform for further discussion between parties to ascertain the possibility of executing the project or otherwise, noting that it neither created a legal or contractual agreement nor did it commit the Federal government in any way.

Oyetomi noted that the clarification became necessary following comments and commentaries by certain persons, especially on social media, concerning the status and implications of the MoU signed on 12th February, 2024 by the minister, Senator Said Alkali with the firm.

“For clarity, a memorandum of understanding, or MOU, is a non-binding agreement that states each party’s intentions to take action, conduct a business transaction, or form a new partnership. 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 an 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 on 8th December 2023.

“The major attraction of the proposal is BABA/MPH’s initiative to achieve 100% 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 approved 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 the initial proposal and the ICRC OBC Certification.

“Messrs. MPH Rail Development is the company incorporated by BABA, as the Special Purpose Vehicle 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 stake holding by parties to the project at the investment stage,” the statement read in part.

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Here 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 nor did it commit the Federal government in any way;

“Article 3.3 of the MoU affirmed that BABA/MPH’s initiative is to achieve 100% private sector funding for the project ‘with no loans or debt to the Nigerian Government or any of its agencies.’

“A fundamental deliverable under the MoU 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 Program of Action to demonstrate its achievement of all the preconditions highlighted by ICRC, before further engagement with the Government and

“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.”

The statement further noted that, “this initiative is still at its preliminary stage. As the proponent, MPH is expected to submit within 90 days of the signing of the MoU evidence of commitment by potential financiers, an Environmental and Social Impact Assessment Report, a Financial Model and Programme of Action, a Full Business Case Study Report, and a Comprehensive Feasibility Study Report.

The Ministry reassured Nigerians and the general public that it is committed to discharging its statutory mandate towards the realization of the “Renewed Hope Agenda” of President Tinubu to deliver efficient, affordable and sustainable transport infrastructure for the country with utmost diligence and fidelity.

It urged the public to discard the insinuations, cynicism and aspersions cast on the said MoU which is neither a legal agreement nor a binding commitment on the federal government.

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