The Ministry of Transportation has responded to concerns regarding the Memorandum of Understanding (MoU) signed with MPH Rail Development (UK) Limited, a UK-based company, for the proposed Port Harcourt-Enugu-Calabar-Abuja rail project.
Recall that Nairametrics earlier reported the details of the MoU, which was signed on February 12, 2024, outlining the company’s involvement in designing, constructing, commissioning, operating, and transferring the rail line.
In a statement by Olujimi Oyetomi, Director of Press and Public Relations, the Ministry clarified that an MoU is non-binding, serving as an expression of intent rather than a legally enforceable agreement.
The Ministry emphasized that the MoU stemmed from an unsolicited proposal by the British African Business Alliance (BABA) in August 2019, submitted to the Ministry and subsequently to the Infrastructure Concession and Regulatory Commission (ICRC) in December 2023.
The Ministry of Transportation noted that it was attracted to the proposal because BABA/MPH committed to securing 100% private sector funding without relying on Nigerian government loans or debt, as stated in Article 3.3 of the MoU.
The commitment resulted in the Regulatory Commission granting approval and issuing a conditional OBC Certification on December 27, 2023, validating the project’s viability. The statement further indicated that COVID-19 significantly contributed to the delay between the initial proposal and the ICRC OBC Certification.
- “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,” the statement read in part.
The statement further clarified that MPH Rail Development (UK) is the Special Purpose Vehicle (SPV) formed by BABA to execute the Port Harcourt-Enugu-Calabar-Abuja rail project. Typically, companies used for such projects have new formations with nominal shareholding to facilitate stakeholding during the investment phase.
Major terms of the MoU
- The MOU’s primary purpose is to facilitate further discussion to assess the project’s feasibility, without creating any legal obligations for the Federal government.
- Article 3.3 of the MoU underscores BABA/MPH’s aim to secure 100% private sector funding without involving Nigerian government loans or debt.
- MPH is tasked with designing a funding and implementation model, to be submitted to the Ministry within 90 days for evaluation.
- Within the same 90-day period, MPH will provide its Programme of Action to demonstrate compliance with ICRC preconditions before engaging further with the Government.
- The MoU establishes a bilateral Technical Committee to oversee MPH’s commitment to meeting project milestones and ensuring project objectives are on track.
More insight
- The statement underscored that the initiative is in its initial phase. MPH, as the initiator, is required to submit various documents within 90 days of the MoU signing, including evidence of commitment from potential financiers, environmental and social impact assessments, financial models, and feasibility studies.
- The evaluation of these documents will determine the project’s viability. The ICRC oversees the process as the regulator of PPP.
- The MoU signifies the start of a comprehensive evaluation process by the Ministry and relevant authorities, notwithstanding the SPV company’s initial low share value, which does not undermine the proposal’s potential.
