By Obas Esiedesa – Abuja
The Nigerian Content Development and Monitoring Board, NCDMB, has set up a $30 million working capital fund to support indigenous oil and gas companies.
The fund, according to NCDMB, will support the operations of local oil companies against the adverse effects of COVID-19 Pandemic, loss of contracts due to low oil price and ensure the companies retain their personnel in employment.
The Executive Secretary of NCDMB, Engr. Simbi Kesiye Wabote who gave details of the fund at an event to sign an agreement with the Nigerian Export-Import Bank, NEXIM Bank, on Wednesday in Abuja disclosed that the roll-out date is July 1, 2021.
He said and NEXIM Bank would provide matching funds of the same amount in Naira to the fund.
The Working Capital Scheme, he explained, 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.
Target beneficiaries include members of the Petroleum Technology Association of Nigeria, PETAN, and Oil and Gas Trainers Association of Nigeria, OGTAN, that are commercially viable with a business relationship with either an International Oil Company or major Nigerian Oil Company.
According to him, “the scheme would cover loans for working capital support and capacity building, invoice discounting and capacity building, including acquisition of low-end equipment to service short-term contracts/service obligations.”
Wabote also explained that the maximum amount that can be borrowed by a single obligor is $1 million or its Naira equivalent, while the tenor of the loan would be up to 12 months for Working Capital loans and up to three years for Capacity Building loans with moratorium of up to 12 months.
“The applicable interest rate shall be 5 percent per annum all-in for Dollar-denominated loans and 8 percent all-in per annum for Naira-denominated loans and the rate shall be fixed throughout the tenor of the loan. Maximum processing time shall be 21 working days from the date the applicant has provided all required documentation,” he added.
Transactions that are eligible for funding support include those connected with oil service contracts, projects or contracts that boost the operations and viability of a qualifying service providers and transactions for the supply oflow-end assets or other equipment for the execution of an oil service contracts from IOCs/ major NOCs.
Wabote clarified that the Board’s Fund arrangement with the Bank of Industry would continue.
He said: “Our intervention with the Bank of Industry is very successful. We audit the process periodically and we have 98 percent compliance in terms of pay back of the loan by creditors.”
Also speaking, the Managing Director of Nexim Nigerian Export-Import Bank, Mr. Abubakar Bello explained that the financial institution was collaborating with NCDMB with a goal to support local service companies to export their services outside the country.
He said: “As the oil and gas industry in other African countries open,the capacities that have been built over time in the Nigerian oil and gas sector can be exported to other African countries and even outside Africa.
“We are going to support the development of capacities of indigenous servicing providers to be able to take them to other oil economies. Since services provide over 15 percent of Nigeria’s Gross Domestic Product, GDP, we should be able to delve into other climes.”