The Nigerian Content Development and Monitoring Board, NCDMB, says it is considering increasing the Nigerian Content Intervention Fund by 100 per cent.
The fund, domiciled in the Bank of Industry, is currently valued at about $100 million, dedicated to lending qualified oil and gas operators for the execution of projects as a strategy to build capacity and encourage the participation of Nigerian companies in the industry.
The Executive Secretary of the board, Simbi Wabote, who disclosed this during his visit to the new Managing Director of the, BOI, Olukayode Pitan, said raising the pool fund would assist more deserving companies.
The NCDMB and BOI launched the NCI Fund in July 2016. But, it suffered long delays to come into operation, as efforts were made to fine-tune the governance process.
The Fund replaced the original model which allowed the provision of partial guarantees and 50 per cent interest rebate to service companies who obtained facilities from commercial banks to assist them acquire asset and execute projects.
Major interest groups in the oil and gas industry, including the Petroleum Technology Association of Nigeria, PETAN, had described the Fund model as a great initiative capable of addressing the paucity of funding for projects by Nigerian firms.
The group said the inability to access credit by manufacturers, service providers, engineering fabrication and construction companies as well as other key players in the Nigerian oil and gas industry was affecting the capacity of indigenous firms to execute contracts.
Since the launch of the Fund, Nigerian operators in the industry have complained of difficulties in accessing the funds under the existing model, necessitating a change of strategy by the Board.
Consequently, Mr. Wabote said the revised governance framework for the Fund had since been finalized, while the updated Memorandum of Understanding, MoU, with the BOI would be signed within the next few weeks to signal the take-off of the scheme.
The Executive Secretary said one of the fundamental features of the revised MoU for the disbursement of the Fund was for the loans to be disbursed directly to beneficiaries by the BOI at single digit interest rate and repaid within five years.
Mr. Wabote said only contributors to the Fund, with bankable proposals in the oil and gas industry, would be qualified to approach the BOI to request for a financing facility.
The Fund is sourced from the statutory funding from the one percent deduction from the value of all upstream contracts based on the provisions of Section 104 of the Nigerian Oil & Gas Industry Content Development, NOGICD Act.
The Act provides that the funds be used for the development of capacity in the oil and gas industry.
Subsection 3 of Section 104 also 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.”
The NCDMB boss noted that whereas there were various intervention funds for other critical sectors of the economy, namely agriculture, aviation, mining and others, none was for the oil and gas sector before now.
The Managing Director of BOI, Mr. Pitan, said he was delighted at the partnership between the bank and NCDMB.
He said BOI, which was present in 21 states of the federation, was well positioned to support the Board achieve its objectives to effectively disburse and manage the loans for the oil and gas industry.
Mr. Pitan assured that the BOI would work with NCDMB to source additional pool of funds for this vital sector of the economy.
The Board had set up an advisory committee in 2012 for the NCDF, to deepen transparency and ensure involvement of key interest groups in the administration.
Representatives of the international operating companies, PETAN, Oil and Gas Trainers Association, OGTAN, and BOI make up the advisory committee.