Railway “contract”: FG clears air on social media allegation of fraud

Railway “contract”: FG clears air on social media allegation of fraud

Amid the controversy of the federal government signing an MoU with MPH UK Railway Development Company for the construction of the Port Harcourt – Enugu – Calabar – Abuja railway line, the Federal Government of Nigeria has come out in defense of the deed, stating that the said MoU was signed to make way for continued discussions.

Social media had been awash last Thursday over an alleged shady contract with MPH railway development company, which it alleged has no antecedent to Railway construction.

However, in clarifying things, the Ministry of Transportation, in a statement issued by the Director of prepubliclylic Relations, Mr Olujomi Oyetola, stated on Sunday that issues surrounding the contract have been construed by social media users.

Oyetomi noted that “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.

“For clarity, a memorandum of understanding, (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.”

According to the statement, the MoU in question arose from an unsolicited proposal presented by the British African Business Alliance (BABA), an Association based in the United Kingdom an with interest in the business in Africa.

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The statement further reads in parts “Its proposal was initially submitted to the Ministry on 27th Agust, 2019. As required, the proposal (Outline Business Case) was submitted to the Infrastructure Concession and Regulatory Commission (ICRC) on 8th December, 023. 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, approved 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 the website 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 stakeholding by parties to the project stage.

“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 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 the Government; and

“The MoU also sets up a bilateral Technical Committee to monitor the Company’s commitment to achieving the above milestones and ensuring that the project objectives are well within sight.

“The Ministry therefore considers it expedient to put out this Statement to reaffirm that this initiative is still at its preliminary stage. As the proponent, MPH is expected to submit within 90 days of the signing of the multi-million commitment by potential financiers, an Environmental and Social Impact Assessment Report, a Financimodela, a Programme of Act, i on and 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;

“That ICRC as the Regulator of PPP is fully and duly in charge of the oversight of this process;

“The MoU thereforconstituteste 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.

“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, afforaffordabled sustainable transport infrastructure for the country with utmost diligence and fidelity. It therefore urges the public to discount the insinuations, cynicism, and aspersions cast on the said MoU which is neither a legal agreement nor a binding commitment on the Federal Government.”