The Federal Ministry of Transportation said the government of Nigeria is yet to have a binding contract with the MPH Rail Development (UK) Limited for the Proposed Port Harcourt-Calabar-Enugu-Abuja Standard Guage Rail Project.
A statement issued by the Ministry, titled “ Setting the Records Straight, on the Memorandum of Understanding (MOU) between the Federal Ministry of Transportation and MPH Rail Development (UK) Limited for the Proposed Port Harcourt-Calabar-Enugu-Abuja Standard Guage Rail Project, noted that the Memorandum of Understanding (MoU) signed on 12th February, 2024 by the Honourable Minister of Transportation (HMT), Senator Said Ahmed Alkali on behalf of the Ministry with Messrs. MPH Rail Development (UK) Limited, a United Kingdom-registered company with Nigerian and foreign shareholding, “ is a non- binding agreement.”
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“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”
Reacting to public commentaries on the status and implications of the Memorandum of Understanding (MoU) signed on 12th February, 2024 by Ahmed Alkali, the Minister of Transportation on behalf of the Ministry with Messrs. MPH Rail Development (UK) Limited, a United Kingdom-registered company with Nigerian and foreign shareholding, the statement revealed that the agreement “ 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”
According to the statement, 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.
Explaining further, the statement said, a “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 Ministry also revealed that the Regulatory Commission had 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.
“Messrs. 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 stake holding by parties to the project at theinvestment stage.
“For the avoidance of doubt 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;
“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’.
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“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;
“The 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; 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”
