- Funso Doherty, the governorship candidate of the ADC in the March 18 gubernatorial election in Lagos State has said that the Lagos state government does not have a binding MoU with Oando Clean Energy Limited on sustainable transportation.
- The current MOU between Oando and the Lagos State Government (LASG) is non-binding, with no commitments or procurement expenditures incurred by LASG.
- Doherty recommended that LASG obtain and review the MOU, encourage public disclosure of the MOU, examine the rationale for appointing Oando without a competitive process, and foster improved clarity and communication on how LASG designates PPPs.
In a recent letter addressed to the Speaker of the Lagos State House of Assembly, Mr Funso Doherty clarified that the Lagos state government does not have a binding memorandum of understanding with Oando Clean Energy Limited regarding sustainable transportation in the state.
He stated this in a letter dated June 27, 2023, which was addressed to the Speaker of the Lagos State House of Assembly. He referenced the meeting he held with members of the committee on public and private partnerships, the state transport ministry as well as the Lagos Metropolitan Area Transport Authority (LAMATA) on June 26.
I attended the meeting convened by the Lagos State House of Assembly Committee on PPPs, on the Oando/LASG Sustainable Transport Initiative with LAMATA, Ministry of Transport and LASG Office of PPPs in attendance. This is my follow-up communication. pic.twitter.com/bD987QNw0p
— funsodoherty (@funsodoherty) June 28, 2023
In his letter, Mr Doherty said that The MOU that has been signed between Oando and the LASG is a non-binding MOU. So, no binding commitments have been made by LASG, and no procurement expenditures have been incurred, contracted, or paid by LASG in respect of the MOU.
A part of his letter stated:
- “The current phase of this initiative is a proof-of-concept phase which builds on the outcome of an earlier independent feasibility study. Oando approached LASG and was appointed, through a non-competitive process, to carry out this phase of the initiative.
- “Oando is voluntarily incurring all the costs of funding the buses needed for the proof-of-concept phase, together with charging infrastructure and related equipment, at no cost or obligation to LASG, and with no assurances given to Oando that they will be appointed or engaged by LASG to participate in subsequent phases of this project.”
Backstory
In May 2023, Mr Doherty raised concerns about the MoU signed between the LASG and Oando Clean Energy Limited. According to him, the announcement of the implementation of a Public Private Partnership (PPP) arrangement between Oando Clean Energy Limited and the Lagos State Government through the Lagos Metropolitan Area Transport Authority (LAMATA).
At the time, Mr Doherty raised two issues of grave public concern:
- Very limited transparency around the PPP initiative. He said that given its proposed scale, public significance, potential cost, and possible impact, the disclosures made by LASG are manifestly inadequate.
- The terms of the MOU entered by LASG with Oando have not been disclosed, including whether it is binding or non-binding, and what commitments are being made by, or required.
Recall that Oando Clean Energy Limited had gone into a partnership with China-based Yutong, to roll out mass transit electric buses in Lagos state following the MoU signed with the LASG.
Doherty’s recommendations
In his June 27 letter, Mr Doherty recommended the following action steps that should be taken by the LASG:
- Obtain and review the MOU if it has not done so already, because of some of the seemingly conflicting impressions created by the earlier statements of the different parties to the transaction. In the circumstances, the LASG may also consider encouraging public disclosure of the MOU.
- Ascertain the rationale for appointing Oando, and why a competitive process was not employed to select a provider for the proof-of-concept phase, given the stated importance, potential scale, and likely impact of this initiative.
- Examine how having Oando fund and perform the proof-of-concept phase, solely at its own expense, may affect LASG’s ability to reach objective and independent conclusions and decisions. This is especially given Oando’s clearly stated business aspirations and commitment to the rollout of electric buses in large numbers.
- Require and foster improved clarity and communication around how LASG defines or designates which projects or activities are deemed PPPs. This will help ensure that transactions that are PPPs in substance, will always be so designated and subjected to the appropriate processes to secure the public interest.
While Mr. Doherty probably means well, it would be a disincentive for PPPs if a private entity approaches the LASG with a proprietary idea only for the LASG to then turn around and throw the idea open for public bidding. What the LASG should be doing is ensuring that it’s getting value-for-money, not “stealing” ideas.