The statement said that as demanded by the Enugu State Government, Pragmatic Palms Ltd. provided a guarantor, which is Diamond Stripes Ltd.
By Jeffrey Agbo
Enugu State Government has said that it does not plan to release N100 billion to Pragmatic Farms Limited as alleged by the opposition.
Enugu State chapter of the Labour Party (LP) had on Sunday called on anti-corruption agencies to investigate the agriculture partnership agreement recently signed between the Enugu State Government and Pragmatic Farms Limited, alleging that the transaction might be a conduit to siphon the resources of the state.
However, in a statement on Monday issued by Uche Anichukwu, the Senior Special Assistant (SSA) on External Relations to Governor Peter Mbah, made available to TheNiche, the government said Pragmatic Palms Ltd is only a Special Purpose Vehicle (SPV) for the partnership that will finance the revitalisation of Enugu State United Palm Products Ltd (UPPL).
The statement noted that UPPL is one of the numerous initiatives of the former Premier of the defunct Eastern Region, the late Michael Okpara, and had lain fallow for decades.
Anichukwu further said, “As a government focused on agriculture and agro-industrialisation, UPPL was, expectedly one of the many moribund assets penciled down for revitalisation by Governor Peter Mbah in line with his campaign promise to convert the state’s dormant assets to productive assets and grow the state’s economy exponentially from the current $4.4bn to $30bn through private sector investments. This culminated in the N100bn deal between the Enugu State Government and Pragmatic Palms Ltd., a subsidiary of Diamond Stripes Ltd. on Thursday, May 9, 2024 after months-long negotiation and due diligence that started way back in 2023.
“Enugu State Government IS NOT releasing N100bn or any dime to Pragmatic Palms Ltd. Instead, Pragmatic Palms Ltd, a Special Purpose Vehicle (SPV) for the partnership, will finance the revitalisation of UPPL. Pragmatic Palm Ltd. will provide finance for 60 per cent of the transaction value, while the Enugu State Government will provide the plantations valued as 40 per cent equity.
“Because several parties/investors are involved, it became imperative, as is the best international practice, to register a Special Purpose Vehicle (SPV) as the platform to transact the deal. Pragmatic Palms Ltd. was duly incorporated before the signing of the agreement.
“For the avoidance of doubt, however, although it is not the case in this instance, it is apposite to also note that the Companies and Allied Matters Act (CAMA), 2020, provides for Pre-incorporation Contract.
“Section 96 (1) of CAMA, 2020, provides: ‘Any contract or other transaction purporting to be entered into by the company or by person on behalf of the company prior to its formation may be ratified by the company after its formation and thereupon the company shall become bound by and entitled to the benefit thereof as if it has been in existence at the date of such contract or other transaction and had been a party thereto.'”
The statement said that as demanded by the Enugu State Government, Pragmatic Palms Ltd. provided a guarantor, which is Diamond Stripes Ltd, a reputable and huge company that has done investments worth over $20bn spanning power and renewable energy sector, port sector, and agricultural sector since 2013.
It added, “Diamond Stripes Ltd. is the sole investor in Onitsha River Port and has invested heavily in the agricultural sector where it is the largest owner of silo complexes in Nigeria. It was involved in the acquisition of 600MW Shiroro Hydroelectric Power plant in 2013, concessions of 30MW Gurara Hydroelectric Power Plant in 2019, and establishment of 300MW Shiroro solar power project in 2021.”
Anichukwu assured that the state’s interest in the N100bn UPPL deal is well secured, benefitting from Mbah’s experience as an investment finance expert and an entrepreneur, who has handled multi-billion-dollar projects himself.
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He said the government also demanded and got bank guarantors from Pragmatic Palms, adding that performance targets and timelines were set in the agreement for Pragmatic Palms Ltd.
According to him, failure to meet targets will mean that the Enugu State Government is free to revoke the deal and reassume total ownership of UPPL.
The statement noted that the Enugu State Government is represented on the company’s board, including the chairmanship of the board, as part of the steps taken to secure the state’s interest.
Explaining further, Anichukwu said, “The MD of Pragmatic Palms Ltd., who is also the MD/CEO of Diamond Stripes, George Nwangwu, is a professor of Project Financing Law, who has led transaction teams that have participated in the consummation of over 100 privatisation or Public Private Partnership (PPP) transactions worth over $20 billion across Africa.
“Prof. Nwangwu was the Head of Infrastructure Finance at the Ministry of Finance under the leadership of Dr. Ngozi Okonjo-Iweala, during which he led the team that delivered the Second Niger Bridge deal.
“He is a Professor of law at Nile University and an Extraordinary Professor at the Department of Mercantile Law, Stellenbosch University. He was appointed a Senior Fellow at the Mossavar- Rahmani Centre for Business and Government, Harvard Kennedy School in 2023 as well as an Honorary Senior Research Associate in the Bartlett School of Construction and Project Management, University College London since 2022; He is the Director General of the Global Centre for Law and Business, Abuja.”