• Tuesday, April 16, 2024
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UK firm pledges 100% private sector funding for Port Harcourt-Calabar-Enugu-Abuja Rail Project

UK firm pledges 100% private sector funding for Port Harcourt-Calabar-Enugu-Abuja Rail Project

MPH Rail Development (UK) Limited has pledged to secure 100% private sector funding for the proposed Port Harcourt-Calabar-Enugu-Abuja standard gauge rail project.

The Federal Ministry of Transportation in a press statement signed by Olujimi Oyetomi, the director, press and public relations, in response to reports on social media raising brows at the choice of company for the Port Harcourt -Calabar-Enugu-Abuja rail project, says the attraction of the British African Business Alliance (BABA) a UK based company is the 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.

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The MoU, signed on February 12, 2024, by the Honourable Minister of Transportation, Senator Said Ahmed Alkali, and representatives of MPH Rail Development (UK) Limited, a UK-registered company with Nigerian and foreign shareholders, has sparked various interpretations and speculations.

The ministry in an attempt to clarify the nature and implications of the agreement emphasized that an MoU is a non-binding agreement that expresses the intentions of each party to undertake actions, engage in business transactions, or explore partnerships. It does not legally bind the parties involved but serves as a platform for further discussions, scrutiny, and potential agreements.

The genesis of the MoU lies in an unsolicited proposal submitted by the British African Business Alliance (BABA) to the Ministry in August 2019. The proposal, aimed at the Port Harcourt-Calabar-Enugu-Abuja standard gauge rail project, was subsequently forwarded to the Infrastructure Concession and Regulatory Commission (ICRC) in December 2023 for evaluation.

Key highlights of the MoU include MPH’s commitment to securing 100% private sector funding for the project without indebting the Nigerian government or its agencies. The agreement also mandates MPH to submit a funding and implementation model, as well as a Programme of Action, within 90 days for further consideration.

The Ministry reiterates that the MoU represents the initial phase of a comprehensive process, with MPH expected to provide detailed documentation within the stipulated time frame. The evaluation of these submissions will determine the viability of the proposal, with oversight from the ICRC, the regulator of Public-Private Partnerships (PPP) in Nigeria.

Furthermore, the Ministry underscores its commitment to fulfilling its mandate of delivering efficient, affordable, and sustainable transport infrastructure, as outlined in the “Renewed Hope Agenda.” It urges the public to disregard any misconceptions or skepticism surrounding the MoU, emphasizing that it does not constitute a binding commitment on the Federal Government at this stage.

The Ministry assures Nigerians of its dedication to transparent and diligent decision-making processes in the pursuit of national development objectives.

The statement reads, “The MoU in question arose from an unsolicited proposal presented by the British African Business Alliance, 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 (ICRC) 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 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 the 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 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 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 Programme 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 Ministry therefore considers it expedient to put out this Statement to reaffirm as follows:

(i) 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 evidences of commitment by potential financiers, Environmental and Social Impact Assessment Report, Financial Model and Programme of Action, Full Business Case Study Report, and a Comprehensive Feasibility Study Report;

(ii) 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;

(iii) ICRC as the Regulator of PPP is fully and duly in charge of the oversight of this process;

(iv) 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; and

(v) 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.”