The Nigerian Content Development and Monitoring Board, NCDMB and Nexim Nigerian Export-Import Bank have signed a memorandum of understanding, MoU, on the administration of US$30 million Working Capital Fund for oil and gas service companies.
The fund which was initiated by NCDMB is meant to cushion the effects of COVID-19 Pandemic on the operations of local oil companies including loss of contracts due to low oil price. Also, with the fund, the companies will ensure they retain their personnel in employment.
It could be noted that the Working Capital Scheme is one of the newly introduced initiatives 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 of the scheme 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.
The scheme kicked off on July 1, 2021 with Nexim Nigerian Export-Import Bank providing matching funds of the same amount in Naira.
According to the Executive Secretary of NCDMB, Engr. Simbi Kesiye Wabote, “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.”
Engr. Wabote further explained that the maximum amount that can be borrowed by a single obligor is US$1,000,000 or its Naira equivalent, while the tenor of the loan would be up to 12 months for Working Capital loans and up to 3 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 said.
”All applications for the fund shall be through the web and NEXIM shall develop and avail a dedicated portal to facilitate the process, with access given to designated NCDMB staff for monitoring and necessary functions,” he added.
Also worthy of note is that 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 of low-end assets or other equipment for the execution of an oil service contracts from IOCs/ major NOCs.
Engr. Wabote also explained that the Board’s fund arrangement with the Bank of Industry, BOI, would continue.
“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,” he said.
Commenting on the agreement signed with NCDMB, the Managing Director of Nexim Nigerian Export-Import Bank, Mr. Abubakar Bello, explained that the financial institution was collaborating with the Board with a goal to support local service companies to export their services outside the country.
“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,” Bello assured.
By Sunday Elom N
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