Abuja, Nigeria. Nigeria’s Minister Of State For Petroleum Resources, Dr. Emmanuel I. Kachikwu today at the PTDF Auditorium in Abuja, headlined the launch of a $200 Million (N61.2 billion) Nigerian Content Intervention Fund powered by Nigerian Content Development and Monitoring Board (NCDMB) and Bank Of Industry, Nigeria. Today’s launch marks the take off of the scheme which lends funds to qualified oil and gas players.
The oil minister Emmanuel I. Kachikwu said, the fund will be used to support local oil and gas firms and is part of a government drive to improve access to low-cost credit across the economy. The Nigerian Content Development Fund (NCDF) would be financed through allocating the fund 1% of the value of all contracts awarded in the state-run upstream oil and gas industry, Kachikwu added.
“I would like to see this fund going to cutting edge, tech-driven businesses”
The Executive Secretary NCDMB, Simbi Kesiye Wabote disclosed that the fund is used for the development of capacity in the Nigeria’s oil and gas industry. Key features of the NCI Fund according to the Executive Secretary are that the loans will be disbursed directly by the BOI at single digit interest rate and repaid within five years.
He disclosed that the new governance framework for the Fund had been finalized and the updated Memorandum of Understanding (MoU) with the BOI signed to signal the take-off of the scheme.
He added that the Funds would only be disbursed through a banking process, after proper risk assessments so as to create the needed confidence and trust. Wabote stressed that only contributors to the NCDF, with bankable proposals in the oil and gas industry can approach BOI for the NCI Fund facility. He noted that whereas there were various intervention funds for other critical sectors of the economy like agriculture, aviation, mining and others, there was none for the oil and gas sector before now.
The NCDMB and BOI launched the NCI Fund in July 2016 with $100m but it suffered delays as efforts were being made to fine-tune the governance process. The NCI Fund replaced the original model whereby the NCDF provided partial guarantees and 50 per cent interest rebate to service companies who obtained facilities from commercial banks for asset acquisition and projects execution. Industry stakeholders experienced difficulty-accessing funds under NCDF model, necessitating a change of strategy by the Board.
Industry stakeholders, including the Petroleum Technology Association of Nigeria (PETAN) had described the NCI Fund model as a great initiative that would address the paucity of funding and inability to access credit, which often beset manufacturers, service providers and other key players in the Nigerian oil and gas industry.
The Managing Director of BOI, Olukayode Pitan, has expressed delight at the partnership between the Bank and NCDMB. Pitan assured that BOI would work with NCDMB to source additional pool of funds for this vital sector of the economy.
He said BOI has presence in 21 states of the federation and is well positioned to help the NCDMB achieve it objectives in effective loans disbursement and management for the oil and gas industry.
Photo: Offshore Oil Platform
Chairman, Petroleum Technology Association of Nigeria (PETAN) Bank-Anthony Okoroafor, said that the Nigerian Content Fund is meant to assist Nigerian companies in need and “Built in Nigeria should be the industry road mantra”.
The promotion of value added local content in moderate collection and value should be placed on existing in-country capacity, not patronage. Leverage should be given to Nigerian companies and help the young companies that are coming up to grow without compromising on capacity building in-country. There should be a sense of urgency because it appears as if the local content law battle has been won but the local content implementation is far from been actualized hence “Local content is equal to self-reliance”
The stated goal of the Nigerian Content Development and Monitoring Board (NCDMB) is to promote the development and utilization of in-country capacities for the industrialization of Nigeria through the effective implementation of the Nigerian Content Act.