By Esther Komolafe-Hassan
Determined to provide the impetus for a significant participation by Nigerian companies in the oil and gas sector, the Bank of Industry (BoI) and the Nigerian Content Development and Monitoring Board (NCDMB) have floated a $100 million (N30 billion) intervention funds, towards boosting revenue and growing employment.
Specifically, the intervention fund which would run on a single – digit returns is set-aside as a credit facility is designed to meet the funding needs of manufacturers, service providers and other key players in the Nigerian oil and gas industry.
The Maritime First was told that the bold initiative meant to re-jig the refinancing of the nation’s oil and gas projects in the country, is in furtherance of a Federal Government’s economic idea planted during the administration of former President Olusegun Obasanjo and was passed into law as the NCD bill.
The mandate also directs the Nigerian National Petroleum Corporation (NNPC) to ensure that certain percentage of jobs in the nation’s oil and gas industry were reserved for the indigenous companies operating in the nation’s oil and gas, as part of its NCD policy, so as to guarantee local participation of Nigerian oil companies, in the petroleum industry.
However, while the government had set-aside a 45 per cent target in 2007; it only achieved 33 per cent, with the aspiration of meeting 70 per cent in the sector by 2010.
Since then, it has become an assiduous task for indigenous oil and gas service operators in the country’s oil and gas industry to achieve the 70 per cent objective.
Speaking at the signing of the MoU on Nigerian Content Intervention Fund in Lagos, the Acting Managing Director, Waheed Olagunju said the NCIF became necessary because of the contractions in the nation’s oil and gas sector as securing funding for oil and gas projects by local companies has become increasingly challenging, thus adding severe impact on the growth of local content development in the country’s oil and gas sector.
He said the NCI fund will be assessable to eligible players at a single digit interest rate of 8 per cent, noting that it is sourced from the NCDF (created by section 104 of the Nigerian Oil and Gas Content Development NOGICD) Act.
Speaking further, he stated that the BoI will serve as the Custodian and Manager of the fund which is meant to finance existing and intending manufacturers, oil and gas service companies and other Original Equipment Manufacturers (OEMs) in the oil and gas industry.
Olagunju explained that the BoI/NCDMB collaboration is based on BoI’s expertise and specialisation as a development bank created to speed up the industrialisation of the Nigerian economy.
The BoI Acting Managing Director also pointed out that interested indigenous oil and gas companies would be expected to apply for a maximum $10 million (N282 million) obligor limit at 8 per cent single digits interest rate; adding that the NCIF has a Tenor range of 1-10 years and a Moratorium maximum of one year from the date of loan disbursement.
“This fund was motivated by the desire to re-engineer the operations of the NCDF, increase access and grow indigenous participation in the oil and gas industry. We are pleased to host you (NCDMB) and eventually we are formally kick-starting this collaboration because it’s took a while to get us to this stage.
“We negotiated the MoU, we went back and forth several times and we are proud of what we have been able to come up with. However, we are optimistic that with this MoU and the partnership with BoI, it will touch the lives of millions of Nigerians.
He continued: “It’s a natural partnership between BoI and NCMB because as you will find out at the course of the presentation, industrialisation runs across every aspect of the NCDMB’s operations, you will always see industrialisation there. So, it’s a natural partnership that the Board is collaborating with BoI.
“Our vision and mission is to transform Nigerian oil and gas sector. You will also see that our mandate is very crucial to the development of the Nigeria’s industrial sector. Our major strategy is commodity based industrialisation and talking about adding value to Nigeria’s natural resource endowment,” Olagunju added.
In his own speech at the event, the Acting Executive Secretary, NCDMB, Patrick Obah, said that the MoU became effective following the directive by the Minister of State for Petroleum Resource, Dr. Ibe Kachikwu that the NCDMB should move the NCDF to BoI because of the various complaints in the industry especially by the indigenous oil and gas operators.
He said it is a statutory law by the Board to deduct the one per cent from all the oil and gas companies operating in the nation’s Upstream sector in the country.
Obah explained that the MoU will go a long way in increasing indigenous oil and gas operators’ participation in the nation’s NCD and help tamed the challenges of accessing loan in the industry.
The NCDMB chief admitted that several local oil service companies have been denied of funding due to the cumbersome requirements given to interested applicants who are willing to secure fund for their oil and gas projects in the country.
“We hope that the MoU between NCDMB and BoI will help to correct the abnormities in the oil and gas industry. We are looking forward for BoI being a very good Custodian and Manager of the fund. We are not a development bank or a banking institution but we are empowered by law to deduct one per cent of contract value in the Upstream sector of the Nigerian oil and gas industry.”
On the allegation that only two indigenous companies have benefitted from the NCD fund, Obah said: “The truth is that it is not only two companies that have benefitted from the fund. I have here Ladol, Starz and others that have benefitted from the fund but the reason why very few companies have benefitted from the fund is not far fetched we know that there are issues with appraising papers of applicants who applied for the funds and that actually caused uproars in the industry. People were complaining that the fund was not being used and people who are supposed to get the fund are being denied.”
However, the objectives of the NCIF are as follow; Fixed assets (machinery and ancillary equipment); Working capital (initial stocks or increase in stocks of raw materials, spare parts and components); leasing of industrial of industrial and business equipment, and; marine vessels.
