By Prince Okafor
As a move to support the operations of oil companies against the adverse effects of COVID-19 Pandemic, the Nigerian Content Development and Monitoring Board (NCDMB) and the Petroleum Technology Association of Nigeria (PETAN) have signed an agreement on a $30mWorking Capital Scheme.
This scheme will also assist industry players following the significant loss of contracts due to low oil price.
The Executive Secretary of NCDMB, Engr. Simbi Wabote along with PETAN Chairman Mr. Nicolas Odinuwe, signed the Memorandum of Understanding (MoU) on the credit scheme in Abuja yesterday.
The Working Capital Scheme is one of the newly introduced products in the Nigerian Content Intervention Fund (NCI Fund) approved by the NCDMB Governing Council under the leadership of the Minister of State for Petroleum Resources, Chief Timipre Sylva.
Key features of the credit scheme are a single obligor limit of One Million US Dollars ($1000,000.00), tenor of365 days after 90 days moratorium and eight percent interest per annum for Naira and five percent for United States Dollars.
According to Wabote, the fund which is currently domiciled with the Bank of Industry will bridge the oil companies’ cash flow gaps, support operations and prevent staff layoffs in the industry.
“The Scheme will be triggered whenever the oil price of $40/barrel benchmark is reached and whenever there are such negative impacts on the industry. The $40/barrel trigger point strategy is important considering the rapidly changing nature of the oil and gas industry.
“Loans granted under the Scheme will enable the beneficiaries to manage operating expenses related to portfolio of oil and gas operations, bridge payment delays and restock inventory.
“The Funds will also be applied in acquiring and maintaining assets, expansion or renovation related to ongoing projects for which working capital is being sought and refinancing of loans.
“Insurance Guarantee covering 120 percent of the loan has to be issued to NCDMB by the intending beneficiary. The Board will also demand a Letter of Sponsorship and Guarantee by PETAN and Irrevocable Standing Payment order issued by Beneficiary Bank.”
He also confirmed that application to the fund will be processed within seven days and approved within seven days and repayment will be in three installments, effective six months, after a 90 days moratorium.
According to him, “The Scheme will be directly managed by the Board using credible consultants in order to simplify and expedite its implementation.
“The MOU has a validity period of three years from effective date and renewable thereafter at the instance of the Board when the Brent crude price falls below $40 benchmark or whenever there are such negative impacts on the industry caused by unforeseeable circumstances beyond control.”