Port Harcourt-Abuja Rail: MoU With MPH Not Legally Binding – Federal Gov’t

The Federal Government has clarified that the Memorandum of Understanding (MoU) recently signed with a United Kingdom firm, Messrs. MPH Rail Development (UK) Limited, for the design and construction of the Port Harcourt, Enugu, Calabar and Abuja standard gauge rail line on Public, Private Partnership (PPP) basis was not legally binding.

The Ministry of Transportation, in a statement in Abuja by the Director, Press and Public Relations, Olujimi Oyetomi, stressed that MoU was a non-binding agreement that states each party’s intentions to take action, conduct a business transaction, or form a new partnership.

He added that the MoU only provides 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.

Oyetomi noted that the clarification became necessary 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 said: “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.

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“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.

“The MoU therefore constitutes 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 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,” the statement said.

The ministry however reassured Nigerians of its commitment to discharge its statutory mandate towards the realisation of the “Renewed Hope Agenda” of President Bola Tinubu.