The Local Content initiative of the federal government has received a boost as five deposit money banks, Fidelity Bank Plc, Access Bank Plc and First Bank Nigeria Plc, inluding two foreign institutions, Citi Bank and Standard Chartered Bank, signed a Memorandum of Understanding (MOU) with Shell Exploration and Production Companies in Nigeria.
The MoU signed in Port-Harcourt will see the five money lenders providing support to Nigeria contractors towards the actualization of Nigeria’s Local Content aspirations.
The initiative is aimed at placing Nigerian contractors at the fore-front of service delivery to the Oil and Gas industry.
In his welcome address, Managing Director and Country Chair, Shell Companies in Nigeria, Mutiu Sunmonu, said that Shell is committed to supporting the federal government’s efforts to reform the industry especially through the local content policy. He noted that the scheme will address the issue of access to funds which appears to be a serious nightmare to operators in the industry.
“Financing of projects has traditionally been a major challenge to contractors’ growth and participation in the delivery of goods and services to the oil and gas industry” Sunmonu added that he is “positive that with the scheme being launched today, financing difficulties will be greatly reduced.”
He explained that banks have committed to relaxing the collateral security requirements, reducing interest rates and establish their competitive advantage and become global players.”
He called on the contractors to work in the spirit of the partnership by fulfilling their obligations to the banks. “The presence of the Chief Executives of Nigeria’s most prestigious banks at this launching is an indication of their commitment to the success of this scheme. I, therefore call upon our contractors not to default on loan payments, and to apply the funds to the agreed projects.
“It is only by keeping to the spirit of the opportunity that you can become bigger, global business. Sunmonu said that he is optimistic that the scheme will play a key role in achieving Nigeria’s aspiration of contributing a significant proportion of the global energy requirement.
In his remarks, the Managing Director & Chief Executive Officer, Fidelity Bank Plc, Mr. Reginald Ihejiahi, described the venture as a national challenge which must be met, adding that Fidelity is proud to be associated with the initiative, while calling for more private sector-led initiatives in the country.
Ihejiahi also explained that the bank has the capacity to support the project with over two decades of experience in financing contractors to the IOCs and existing contract finance facility that ties into the Shell Proposed Fund.
Specifically, he said that Fidelity has “enhanced market competitiveness through improved infrastructure, quality service delivery systems and increased nationwide spread with branches located in the oil and gas hub of Port Harcourt, Warri and Lagos for proximity to the Oil Service providers.”
He said that Fidelity would deploy its experience in Oil and Gas Contractor Finance to the Shell Scheme for quick turnaround, business advisory and access to finance as well as leverage on its extensive correspondent banking relationship for seamless international trade and transaction banking operations.