The scheme would make loan application from banks easier for contractors.
The Nigeria LNG Limited, NLNG, on Wednesday established a $1 billion (about N156billion) Local Vendors Financing Scheme to make access to bank loans available to its registered contractors and vendors at competitive rates and affordable terms.
The NLNG is owned by four shareholders, namely, the Federal Government of Nigeria, represented by the Nigerian National Petroleum Corporation, NNPC (49%), Shell Gas BV, SGBV, (25.6%), Total LNG Nigeria Limited (15%), and Eni International (N.A,) N. V. S. a. r. l (10.4%).
A Memorandum of Understanding, MoU, signifying the formal takeoff of the scheme was signed in Port Harcourt, between the company and the five participating banks, including Access Bank, First Bank of Nigeria, Standard Chartered Bank, United Bank for Africa and Zenith Bank.
The General Manager, External Relations, Kudo Eresia-Eke, said the scheme was a demonstration of NLNG’s commitment to the Nigerian Content policy of the Federal Governemnt, adding that it aligned with the company’s attempt to help to build a better Nigeria.
Under the scheme, contractors registered with NLNG can approach any of the banks and apply for the loans accompanied with a work order, purchase order or contract document from NLNG.
NLNG’s Chief Executive Officer and Managing Director, Babs Omotowa, said at the MoU signing that the scheme would help alleviate funding challenges often faced by its contractors when they have jobs to execute, adding that the arrangement would also reduce operating cost, improve project delivery timeline and drive the growth of Nigerian vendors, thereby improving the capacity of the country’s entrepreneurs.
Mr. Omotowa was represented by the company’s General Manager for Finance, Solomon Folaranmi.
“This is just a step, and in the right direction. The success of any local contractor is linked to larger and smaller businesses around it in the value chain. We need to further develop initiatives as an enabler or platform to develop the value chain and maximize the opportunities of the future, especially with huge projects in sight, such as the Federal Government’s Gas Master Plan initiative and Train 7,” he said.
NLNG, he noted, recognised lack of access to adequate funding as one of the many challenges limiting the sustainable growth and development of local content in the country, saying a significant number of willing contractors struggle to get financing. Nigeria banks often found it difficult granting loan applications from local contractors with little or doubtful assurances of repayment.
Mr. Omotowa said a local enterprise with little track record, credit history or illiquid collateral was likely to have risks perceived to be high, making it more difficult for it to find finance.
On NLNG’s record in the development of Nigerian Content, Mr. Omotowa said the company has “deliberately grown local, regional, and national contractor base, adding that its local content policy has helped in the development of many indigenous companies involved in such areas as engineering, manufacturing, fabrication, craft and skill acquisition.
The General Manger, Finance, represented by NLNG’s Finance Controller, Frederick Asasa, noted that the scheme was neither a grant nor award meant to distribute free money to NLNG contractors, adding that NLNG and the participating banks have developed a comprehensive strategy to ensure effective monitoring of the scheme.
He said the NLNG has recorded milestone achievements in the development of Nigerian Content in the areas of manufacturing, fabrication, shipping, training and skills development and transfer of technical knowledge to indigenous companies.
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