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MoU with UK firm on rail project is not final – FG

MPH proposes to implement project at zero cost to FG

Minister of Transportation, Senator Said Ahmed Alkali at the signing of the MoU with MPH Rail Development Limited in Abuja.
Minister of Transportation, Senator Said Ahmed Alkali at the signing of the MoU with MPH Rail Development Limited in Abuja.

The Federal Government has reacted to concerns raised about the competence of MPH Rail Development Limited, a construction firm from the United Kingdom which recently signed a Memorandum of Understanding with the Ministry of Transportation.

The ministry says there is no cause for alarm as negotiations are still at the preliminary stage.

Recall that negative reactions followed the announcement of the signing of an MoU between the Ministry and MPH Rail Development Limited to implement the Port Harcourt–Enugu–Calabar–Abuja Standard Gauge Rail Line project, following a public-private partnership framework.

Many Nigerians took to social media to express their concerns about the lack of track record of the UK company in the area of rail development.

Microsecondnews (MSN) also reported that MPH Rail Development Limited was formerly known as Mordecai JB Limited, and changed its name to MPH on 16th February 2021.

MSN also reported that the directors of the company listed on a UK government site are six with four of them being Nigerians and two designated as being of British nationality.

The publication further reported that one of the Nigerian directors, Adeyemi Ikuforiti, pulled out of the company on Saturday, March 16 following exposure in the media.

Many Nigerians argue that the entire deal is suspicious and smacks of another “P&ID saga in the making,” in reference to the high-profile contract dispute between Nigeria and P&ID, a British Virgin Islands-registered company.

However, in a press statement signed by the Director of Press and Public Relations, Olujimi Oyetomi, on Sunday, the ministry assured Nigerians that the MoU signed had no binding effect on the parties.

Oyetomi 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.”

He stated that 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.

He further explained, “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.”

In describing the company, Oyetomi said, “Messrs. MPH Rail Development (UK) is the company incorporated by BABA as the Special Purpose Vehicle (SPV) to ‘deliver’ the project.

“It must be emphasised 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 ministry noted that MPH is required to provide several documents within 90 days of signing the MoU.

These include evidence of commitment from potential financiers, an environmental and social impact assessment report, a financial model and programme of action, a full business case study report, and a comprehensive feasibility study report.

“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,” the ministry said.

“ICRC as the regulator of PPP is fully and duly in charge of the oversight of this process.

“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.

“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,” it added.

Therefore, the ministry assured Nigerians that it would diligently fulfil its legislative responsibility to provide the nation with an economical, sustainable, and efficient transportation infrastructure.

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