By Sebastine Obasi
Indigenous companies in the oil and gas industry will soon have access to more fund as the Nigerian Content Development and Monitoring Board (NCDMB) is planning to increase the funds lent to qualified oil and gas players under the Nigerian Content Intervention Fund (NCI Fund) from $100m to $200m.
The Executive Secretary NCDMB, Simbi Wabote, who stated this during a visit to the new Managing Director of the Bank of Industry (BoI), Mr. Olukayode Pitan, in Lagos, said that an increase of the pool would ensure that more deserving companies benefit from the Fund.
He explained that the new governance framework for the Fund had been finalized as the updated Memorandum of Understanding (MoU) with the BoI will be signed within the next few weeks to signal the take-off of the scheme.
Key features of the NCI Fund according to the Executive Secretary are that the loans will be disbursed directly by the BoI at single digit interest rate and repaid within five years.
Wabote stressed that only contributors to the Nigerian Content Development Fund (NCDF), with bankable proposals in the oil and gas industry can approach BoI for the NCI Fund facility.
He noted that whereas there were various intervention funds for other critical sectors of the economy like agriculture, aviation, mining and others, there was none for the oil and gas sector before now.
The NCDMB and BoI launched the NCI Fund in July 2016 with $100m but it suffered delays as efforts were being made to fine-tune the governance process.
The NCI Fund replaced the original model whereby the NCDF provided partial guarantees and 50 per cent interest rebate to service companies who obtained facilities from commercial banks for asset acquisition and projects execution.
Industry stakeholders experienced difficulty accessing funds under NCDF model, necessitating a change of strategy by the Board.
The stakeholders, including the Petroleum Technology Association of Nigeria (PETAN) had described the NCI Fund model as a great initiative that would address the paucity of funding and inability to access credit which often beset manufacturers, service providers and other key players in the Nigerian oil and gas industry.
Also speaking, the Managing Director of BoI expressed delight at the partnership between the Bank and NCDMB.
He said BOI has presence in 21 states of the federation and is well positioned to support the Board achieve it objectives in effective loans disbursement and management for the oil and gas industry.
Pitan assured that BoI will work with NCDMB to source additional pool of funds for this vital sector of the economy.
The NCI Fund is sourced from the statutory NCDF which is funded from one percent that is deducted from the value of all upstream contracts.
The NCDF is underpinned by Section 104 of the Nigerian Oil and Gas Industry Content Development (NOGICD) Act, which provides that the funds be used for developing capacity in the oil and gas industry. Subsection 3 of Section 104also provides that “the fund shall be managed by the Nigerian Content Development Board and employed for projects, programmes and activities directed at increasing Nigerian Content in the oil and gas industry.”