The Bank of Industry (BoI) and Nigerian Content Development and Monitoring Board (NCDMB) have signed a Memorandum of Understanding (MoU) to facilitate the disbursement of $100 million to operators in the oil and gas sector for local content development.
Under the agreement, the bank will serve as the custodian and manager of the $100 million Nigerian Content Intervention Fund (NCI Fund) to meet the funding needs of manufacturers, service providers and other key players in the nation’s oil and gas industry.
Specifically, the NCI Fund will be disbursed to operators in the sector at a single digit interest rate of eight per cent with a tenor period of between one to ten years.
Furthermore, the Fund will attract a moratorium of 12 months and a maximum of $10 million obligor limit for operators seeking to access the fund.
Speaking at the signing of the pact in Lagos, yesterday, the Acting Managing Director, BoI, Waheed Olagunju expressed optimism of the partnership having a lot of impact on the lives of many Nigerians.
According to him, the bank has been managing some funds for several stakeholders and would ensure that the NCI fund is disbursed to the appropriate beneficiaries so that value-addition can be promoted in the oil and gas sector.
“We will begin to promote more industrial projects in the oil and gas sector while ensuring that there are linkages with small and medium enterprises. The value-chain in the oil and gas sector needs to be explored for job creation, as this is the only way to promote an inclusive growth”, he added.
Regional Manager, South, BoI, Balarabe Hassan while providing an insight to the implementation of the agreement, explained that the Nigerian Content Development Fund was established by the section 104 (1,2,3) of the Nigerian oil and gas industry Content Development Act of 2010 but amended in an effort to create a structured and transparent process for accessing the fund.
The Fund was established by the Nigerian Content Act and is pooled from one per cent of all contracts awarded in the upstream sector of the oil and gas industry for use in developing the supply chain and building local capacity in the industry.
Seventy per cent of the pool is to be used to provide guarantees for single digit and longer tenure lending by banks and funding institutions to Nigerian service companies seeking, to acquire critical assets while thirty per cent will be applied for direct intervention by the Board in critical infrastructure development and training programmes.
“The Fund was motivated by the desire to re-engineer the operations of the NCDF, increase access and grow indigenous participation in the oil and gas sector.
“Specifically, the NCI Fund will help stakeholders in the sector procure fixed assets, working capital, leasing of industrial and business equipment and acquisition of marine vessels. Intending beneficiaries who have previously executed contracts in the industry must be up-to-date with their remittances to the NCDF”, he added.
Acting Executive Secretary, NCDMB, Patrick Daziba Obah, stated that the Fund is expected to close the financing gap presently being experienced by stakeholders when embarking on projects.
Noting that stakeholders had challenges with the previous model of the NCDF through delays emanating mostly from the processes in the banks and how the companies packaged their proposals, Obah urged BoI management to ensure that such challenges are addressed.
Chairman of the Petroleum Technology Association of Nigeria (PETAN), Bank-Anthony Okoroafor urged stakeholders to raise the target to $600 million from the initial $100 million in order to enhance the capacity of indigenous stakeholders in the sector.
