Federal Ministry Of Transportation Clarifies MoU With MPH Rail Development, Calls It Non-Binding Agreement

The Federal Ministry of Transportation (FMT) has released a statement to address the growing concerns and commentaries surrounding the Memorandum of Understanding (MoU) signed on February 12, 2024, between the Honourable Minister of Transportation, Senator Said Ahmed Alkali, and Messrs. MPH Rail Development (UK) Limited for the proposed Port Harcourt-Calabar-Enugu-Abuja Standard Gauge Rail Project.

The Ministry clarified that the MoU is a non-binding agreement that outlines each party’s intentions to take action, conduct a business transaction, or form a new partnership. It does not constitute a legally binding agreement but rather provides a platform for further engagement, discussion, scrutiny, and the provision of required guarantees by the parties to reach an agreement if satisfied.

The MoU originated from an unsolicited proposal presented by the British African Business Alliance (BABA), a UK-based association with business interests in Africa. The proposal was initially submitted to the Ministry on August 27, 2019, and subsequently to the Infrastructure Concession and Regulatory Commission (ICRC) on December 8, 2023. The ICRC granted approval and issued a conditional OBC Certification on December 27, 2023.

One of the key attractions of the proposal is BABA/MPH’s initiative to achieve 100% private sector funding for the project without loans or debt to the Nigerian Government or any of its agencies, as stated in Article 3.3 of the MoU.

Read the full statement below

FEDERAL MINISTRY OF TRANSPORTATION PRESS STATEMENT SETTING THE RECORDS STRAIGHT: 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 GAUGE RAIL PROJECT

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.

2.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.

3.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.

4.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.

4. 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 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.

5.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;

(iii)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

(iv) 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.

6. For the avoidance of doubt, the Ministry wishes to reassure Nigerians and the general public that it is committed to discharging its statutory mandate towards the realization of the “Renewed Hope Agenda” of Mr. President to deliver efficient, affordable and sustainable transport infrastructure for the country with utmost diligence and fidelity. It therefore urges the pubic to discountenance the insinuations, cynicism and aspersions cast on the said MoU which is neither a legal agreement nor a binding commitment on the Federal Government.

Signed, Director Press and Public Relations
Dated 16th March, 2024.
FEDERAL MINISTRY OF TRANSPORTATION.