FG explains status, implications of UK firm MoU on rail project

…Says not legally binding

By Tayo ABIOLA

The Federal Government has explained the status of the Memorandum of Understanding (MoU) recently signed with a United Kingdom firm; MPH Rail Development (UK) Limited.

The MoU was signed for the design and construction of the Port Harcourt, Enugu, Calabar and Abuja standard gauge rail line on Public, Private Partnership (PPP).

The Ministry of Transportation, in a statement by the Director, Press and Public Relations of the Ministry, Olujimi Oyetomi, pointed out that the clarification became imperative 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.

He pointed out that the MoU was a non-binding agreement that states each party’s intentions to take action, conduct a business transaction, or form a new partnership.

Oyetomi further explained that the MoU 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 statement reads, “The attention of the Federal Ministry of Transportation (FMT) has been drawn to emerging comments and commentaries by certain persons (especially on social media) concerning the status and implications of 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.

“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 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 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 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.

“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.

“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 however, wishes reassures Nigerians and the general public that it was committed to discharging its statutory mandate towards the realisation of the ‘Renewed Hope Agenda’ of President Bola Tinubu.