Despite FG’s attempt to spin narrative, Nigerians question MoU with UK firm having no history in railway construction

Fresh controversies have emerged concerning 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.

Reports have emerged that the embattled former Lagos State House of Assembly Speaker who is currently standing trial over corruption charges, Adeyemi Ikuforiji owned a stake of the company in question and only resigned from the company as late as March 15, 2024.

Surprisingly, the said company with only 6 Directors, which has no prior history of construction much more railway construction and which only came into existence in 2019 is poised to secure billions of Naira worth of project from the Federal Government.

On Friday, Said Ahmed Alkali, the minister of transportation had announced the signing of a memorandum of understanding (MoU) with the company to enable it to “carry out the design, construction, commissioning, operation and transfer of the Port-Harcourt–Enugu–Calabar–Abuja Standard Gauge Rail Line on Public–Private Partnership basis”.

The MoU is a prelude to the final award of the contract that may run into billions of naira by the Federal Executive Council, constitutionally chaired by the president.

“This development will enable the company to concentrate on preparing relevant documents to support a request for approval of the Federal Executive Council to execute the project,” the March 13 statement, signed by Olujimi Oyetomi, the director, press and public relations at the ministry, had disclosed shortly after the signing of the MoU.

A background check into the company showed that one Jason Andrew, a Briton registered the company in 2019 as Mordecai JB Ltd., with him as the only director.

On December 12, 2020, SMITH, David Neil was appointed as a director and person with significant control at the company. On February 16, 2021, the company’s name was changed to MPH Rail Development Ltd.

With evidence of dormancy and a compulsory strike-off notice by the authorities, the company first co-opted Ikuforiji and Osinowo Rotimi as directors on October 30, 2023, in an approach that shows its entry into Nigeria.

The company further brought Osinowo Sayeed and Mudashiru Oriyomi on board as directors on January 16, 2024. This increased its Nigerian ownership. However, there is no evidence of its previous project handling in Nigeria or in the UK.

The development has been likened to the now infamous PI&D contract scam which almost cost Nigeria $9.6bn in fines.

A social media user known as @X handles @Nigerianlawyers had unraveled the said company, he wrote; “Why are we like this in Nigeria? The company was incorporated on 26 September 2019 with a share capital of £100.

“It filed accounts in August 2021, June 2022, and April 2023 with the UK Companies House as a *dormant* company! It still only showed £100 share capital.

In May 2022, the UK Companies Registry filed a notice of compulsory dissolution but discontinued it a month later. In October 2023, it increased its share capital to £1,000.

Then, in March 2024, it wins a BOT contract for the PH-Enugu-Calabar-Abuja rail line. Are we ever serious in this country? Haven’t we learned anything from P&ID?

“Not one person in that paper company’s board has ever been associated with construction talk less of a railway.”

However, reacting to the expose, the Ministry of Transportation in a statement titled “Setting The Records Straight: The Memorandum Of Understanding (MUu) Between The Federal Ministry Of Transportation And Mph Rail Development (UK) Limited For The Proposed Port Harcourt-Calabar-Enugu – Abuja Standard Gauge Rail Project” issued by Olujimi Oyetomi, Director, Press and Public Relationsclarified that the MoU signed does not guarantee the award of the contract to MPH Rail Development (UK) Limited.

It further clarified 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’.

It added that the 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 amongst other requirements.

The lengthy clarification reads; “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, 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.

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.

READ ALSO:Nigerian govt, UK firm sign MoU for Port Harcourt–Abuja standard gauge rail line

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.

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 public 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”.

However, the statement failed to touch on the ownership or competence of the company.

The defence put up by the Ministry has continued to draw backlash from Nigerians.

A user identified as Henry Balogun with the handle @henrybalogun described the record setting attempt by the ministry as hogwash as it failed to conduct the relevant check before issuing the statement.

“The Ministry should simply have checked on what exactly BABA was about before presenting this defence which makes their setting the records straight hogwash.

“Simple research would have made someone note that BABA should not even have been mentioned. Several attempts for compulsory strike off and how does its business activities relate to setting up a subsidiary business involved in rail construction. I mean. #LetsGetReal” he wrote.

Another user, Mohammed Dahiru with the account, @MDahiru is convinced that the company lacks the expertise to handle the contract.

“The company lacks the technical capacity to handle the contract” he simply wrote.

By: Babajide Okeowo

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