MoU on rail project with UK company is not binding - FG

Regarding the recent Memorandum of Understanding between the Ministry of Transportation and the United Kingdom-based construction company MPH Rail Development Limited, the Federal Government has offered clarifications.

The government claims that the agreement is not legally binding.

This comes after FG reportedly signed a Memorandum of Understanding with a “unknown” business, according to recent sources.

The ministry was criticized by several social media users for signing an MOU with a newly constituted company, according to a report by The Cable that uncovered paperwork proving the company was founded on September 26, 2019.

Some called the scenario another “P&ID saga in the making,” alluding to the well-known contract issue that P&ID, a business registered in the British Virgin Islands, had with Nigeria.

According to OpaPost, the Ministry of Transport and Messrs MPH Rail Development Limited, a UK-based business, signed a memorandum of understanding.

Through the use of a public-private partnership structure, this collaboration seeks to carry out the Port Harcourt–Enugu–Calabar–Abuja Standard Gauge Rail Line project. According to the conditions of the MoU, the UK business will be in charge of the design, building, commissioning, operation, and ultimate transfer of the Port Harcourt–Enugu–Calabar–Abuja Standard Gauge Rail Line.

The ministry claims that prior to the signing of the Memorandum of Understanding, the Infrastructure, Concession, and Regulatory Commission issued a compliance certificate and approved the Outline Business Case.

But on Sunday, the ministry issued an explanation in a statement that was signed by Olujimi Oyetomi, the director of press and public relations for the ministry.

According to Oyetomi, social media remarks on the status and ramifications of the MOU caught the ministry’s attention.

Part of the statement said, “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 arrangement, Oyetomi continued.

According to him, it merely offers a forum for additional interaction, deliberation, examination, and the giving of necessary assurances by the parties in order to come to a decision if they are satisfied.

He went on to say, “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,” stated Oyetomi in characterizing the organization.

“It is important to note that a company used for this kind of purpose is typically brand-new and has minimal shareholding, allowing project participants to hold stakes at the investment stage.”

Within ninety days of signing the Memorandum of Understanding, MPH must submit a number of documents, according to the ministry.

These consist of commitment letters from possible investors, a report on the social and environmental impact, a financial model and action plan, a thorough business case study report, and an extensive feasibility study report.

The ministry stated that “the submission of the above-listed documents and the outcome of their evaluation will determine the desirability or otherwise of the proposal.”

As a result, the ministry gave Nigerians assurances that it would carefully carry out its legal obligation to give the country an affordable, sustainable, and effective transportation infrastructure.