The Nigerian Content Development and Monitoring Board (NCDMB) may increase its loanable funds to qualified oil and gas operators under the Nigerian Content Intervention Fund (NCI Fund) from $100 million to $200 million.
The Executive Secretary of NCDMB, Simbi Wabote, made this known yesterday during a visit to the newly appointed Managing Director of the Bank of Industry (BoI), Olukayode Pitan, in Lagos. NCDMB appointed BoI as the custodian and manager of the fund.
The NCDMB and BoI launched the NCIFund in July 2016 with $100 million, but its implementation was delay because of the need to fine-tune its governance process.
The NCI Fund replaced the former model that required the Nigerian Content Development Fund (NCDF) to provide partial guarantees and 50 per cent interest rebate to service companies that obtained facilities from commercial banks for asset acquisition and projects execution. The NCDF had about $600 million in its custody.
In the previous order, industry stakeholders experienced difficulties in accessing funds, a development that necessitated the change of strategy by the board. Wabote said the new governance framework for the Fund has been finalised, saying the updated Memorandum of Understanding (MoU) with BoI will be signed within the next few weeks to signal the take-off of the scheme.
Key features of the NCI Fund, he said, are that the loans will be disbursed directly by BoI at single digit interest rate and repaid within five years, adding that only contributors to the Nigerian Content Development Fund (NCDF), with bankable proposals in the oil and gas industry can approach the lender for the facility.
Wabote said unlike agriculture, aviation, and mining, among others were various intervention funds are provided, there was none for the oil and gas sector before now.
Industry stakeholders, including the Petroleum Technology Association of Nigeria (PETAN) and Oil and Gas Trainers Association (OGTAN), described the NCI Fund model as a great initiative that would address the paucity of funds, creating huddles for operators to access credit which often beset manufacturers, service providers and other key players in the Nigerian oil and gas industry.
The Board was set up by an advisory committee in 2012 for the NCDF with a view to deepening transparency and ensure involvement of key stakeholders in its administration.
Representatives of the international oil companies (IOCs), PETAN, OGTAN and BoI make up the advisory committee.
The BoI chief 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 its objectives in effective loans disbursement and management for the oil and gas industry. He assured that BoI will work with NCDMB to source additional pool of funds for this vital sector of the economy.
He said intending beneficiaries from the Fund must have evidence of having previously executed contracts in the industry and must be up-to-date with their remittances to the NCDF, adding that Bol will obtain confirmation from the NCDMB before any application can be successful.
BoI said the NCI Fund will attract a single digit interest rate of eight per cent with a tenor ranging from one to 10 years, with a maximum moratorium of 12 months from date of loan disbursement, and $10 million maximum obligor limit.
The NCI Fund is sourced from the statutory NCDF which is funded from one per cent 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.