Oil & Gas
THE Nigeria Content Development and Monitoring Bank (NCDMB) and the Nigeria Export Import Bank (NEXIM) have signed agreement on 30 million dollars Capital and Capacity building Fund for the oil and gas sector servicing.
Mr Simbi wabote, the Executive Secretary of NCDMB said at the signing ceremony in Abuja on Wednesday that the fund would go a long way to stabilise the sector.
“I want to commend Oil Producers Trade section (OPTS) because 98 per cent of the fund that we utilise in NCDMB are contributed by the OPTS members who generate these money for us.
“I know that OPTS and Independent Petroleum producers Group (IPPG) at some point raised before NCDMB that ability of most of the indigenous contractors to provide service to them due to fund challenges, especially when we got struck by COVID-19.
“I recalled receiving several letter particularly from IPPG trying to see how we support this and also I recall receiving similar letter from Petroleum Technology Association of Nigeria (PETAN) when the COVID-19 struck.
“And most people have nothing to do anymore because companies were shut down and most were threatening on how to downsize and kick off their pay roll.
“Based on this, we then set up a committee to see how we can support, so this funding scheme is working capital intervention which is happening with NEXIM bank, our other intervention fund is still with Bank of Industry (BOI) and it has been very successful with almost 98 per cent compliance in terms of pay back of the loan.
“So the roll out date for this new scheme is expected to be July1, 2021 and the fund size is 30 million dollars and it will be boosted by matching fund of the same amount to be provided by NEXIM bank in naira, to be converted at the prevailing official exchange rate.
“So, whatever NCDMB is putting on the table will be matched in naira terms with the NEXIM bank to support working capital provision for those providing services in the oil and gas sector,’’ he said.
He said that the scheme would cover loan for working capital support and also capacity building, invoice discounting and capacity building including acquisition of low end equipment to service contracts and service obligation.
He said that fund would also under project categories cover, invoice discounting, oil service contracts, capacity building including financial advisory and literacy and low end equipment and asset acquisition that the fund could accommodate.
Wabote noted that the target market include Nigeria oil service providers that belong to a professional association in the Nigerian oil and gas industry and commercially viable in a business relationship with either the IOCs or the indigenous oil and gas producers.
“The maximum amount that can be borrowed by single obligor is one million dollars or its naira equivalent at official exchange rate prevailing at the time of the borrowing.
“The tenure shall be up to 12 months for working capital loans and up to three years for capacity building loan for a moratorium of up 12 months.
“The applicable interest rate shall be five per cent per annum for all foreign currency denomination and eight per cent per annum for Naira denominated loans and the rate shall be fixed throughout the tenure of the loan.
“The maximum processing time as agreed with NEXIM will be 21 working days from the date the applicant has provided all required documents broken down as follows 12 working days for loan application processing by NEXIM, five working days for NCDMB concurrence for loan approved by NEXIM and the remaining for disbursing by NEXIM,’’ he said.
He said that these time lines had been agreed; adding that all application would be through a web and NEXIM would develop and avail a dedicated portal to facilitate the process.
He noted that for transparency, no application should come to NCDMB, adding that all application should go to NEXIM bank, similar to what NCDMB do with the BOI.
He said that access would be given to NCDMB members to be monitoring and for other necessary functions to make sure that all protocols are observed.
Wabote said that eligibility transaction for the fund comprised transaction connected with oil and gas services contracts, contracts that boost the operations and viability of qualifying members.
Others are transactions for the supply of low earned assets and other equipment for the execution of oil and gas contracts for IOCs, indigenous and National oil companies.
“The suit of collaterals requirement will cover loans under the scheme listed as follows , certified invoices by NEXIM, association guarantee, when we get all the necessary documentation that such an association is viable , assignment of contracts , cooperate guarantee are also considered by NEXIM .
“Irrevocable domiciliation of proceeds are also part of requirement, irrevocable standing payment order from the receiving banks will also be looked at as part of the requirement and insurance cover with NCDMB and NEXIM noted as payees .
“Each party to the scheme, NCDMB and NEXIM shall bear 50 per cent credit risk for loan repayment and will be entitled to equal share of interest income, each month,’’ he said.
Wabote said that after provision for of the 0 5 per cent of capacity building of operators of the NEXIM shall in addition remit to NCDMB interest on the undisbursed portion of the fund.
He said that NEXIM would also provide the brain work and facilities for joint monitoring of loan utilisation and project execution by both NCDMB and NEXIM and maintain separate books of account for the scheme.
According to him, relevant NCDMB office will have access from time to time.
“NCDMB shall be responsible for appointment of external auditors that would carry out annual statutory audits for the scheme each year as required by law.
“This whole process was subjected to NCDMB governing council and approved as what must be done to support the oil and gas industry ,’’ he added .
He said that the fund could be regarded as President Muhammadu Buhari’s intervention to keep the oil and gas sector afloat after COVID-19’s impact as had been done to other sectors of the economy.
He commended the Minister of State for Petroleum Resources Chief Timipre Sylva for the support in getting the scheme available.
In his remarks, the Managing Director of NEXIM, Mr Abba Bello said the bank was pleased to be part of the fund to ensure that services were afloat in the oil and gas sector.
He said that it would surprise many that NEXIM was involved in oil and gas issues but this was because service was also exportable.
“As oil and gas sectors of other African countries, especially open up the capacities that we have built over time in the Nigerian sector becomes exportable to African countries and oil economies.
“We are very happy to be part of this and we are going to support the development and build enough capacity of indigenous service providers to be able to take them to other oil economies.
“We believe that services provide over 15 per cent of Nigeria GDP, we should be able to take out into other climes , this partnership with NCDMB is a step towards our aspiration to take services into the continent and eventually to the global market ,’’ he said.
The News Agency of Nigeria reports (NAN) that representative of PETAN and OPTS and other stakeholders commended the NCDMB and NEXIM bank for the gesture
– June 23, 2021 @ 19:10 GMT|Tags: capacity building fund NCDMB NEXIM sign agreement on $30m capital