NCDMB, NEXIM bank sign $30m funding deal for oil service firms

The Nigerian Content Development and Monitoring Board (NCDMB) and the Nigerian Export-Import Bank (NEXIM-Bank) have signed a memorandum of understanding (MoU) on the administration of $30 million working capital fund for oil and gas service companies.

The deal was signed recently in Abuja between the two government establishments.

The Fund was conceived by the NCDMB to support the operations of local oil companies against the adverse effects of COVID-19 pandemic, loss of contracts due to low oil price and ensure the companies retain their personnel in employment.

The working capital scheme, according to a statement, is one of the newly introduced products in the Nigerian Content Intervention Fund (NCI Fund) approved by the NCDMB Governing Council under the leadership of the Minister of State for Petroleum Resources, Chief Timipre Sylva.

The target beneficiaries of the fund include members of the Petroleum Technology Association of Nigeria (PETAN) and Oil and Gas Trainers Association of Nigeria (OGTAN) that are commercially viable with a business relationship with either an International Oil Company (IOC) or major Nigerian Oil Company (NOC).

Giving details of the Fund, the Executive Secretary of NCDMB, Mr. Simbi Wabote was quoted in the statement as stating that the roll-out date was July 1, 2021, and that NEXIM Bank would provide matching funds of the same amount in naira.

“The scheme would cover loans for working capital support and capacity building, invoice discounting and capacity building, including acquisition of low-end equipment to service short-term contracts/service obligations,” Wabote said.

Wabote also highlighted that the maximum amount that could be borrowed by a single obligor is $1,000,000 or its naira equivalent, while the tenure of the loan would be up to 12 months for working capital loans and up to three years for capacity building loans with moratorium of up to 12 months.

“The applicable interest rate shall be five percent per annum all-in for Dollar-denominated loans and eight percent all-in per annum for Naira-denominated loans and the rate shall be fixed throughout the tenure of the loan.

“Maximum processing time shall be 21 working days from the date the applicant has provided all required documentation,” Wabote added.

He also confirmed that, ”all applications for the fund shall be through the web and that NEXIM shall develop and avail a dedicated portal to facilitate the process, with access given to designated NCDMB staff for monitoring and necessary functions.”

Transactions that are eligible for funding support include those connected with oil service contracts, projects or contracts that boost the operations and viability of a qualifying service providers and transactions for the supply of low-end assets or other equipment for the execution of an oil service contracts from IOCs/ major NOCs.

Wabote explained that the board’s fund arrangement with the Bank of Industry (BOI) would continue, saying “Our intervention with the Bank of Industry is very successful. We audit the process periodically and we have 98 percent compliance in terms of pay back of the loan by creditors.”

On his part, the Managing Director of NEXIM Bank, Mr. Abubakar Bello, stated that the financial institution was collaborating with NCDMB with a goal to support local service companies to export their services outside the country.

Bello said: “As the oil and gas industry in other African countries open, the capacities that have been built over time in the Nigerian oil and gas sector can be exported to other African countries and even outside Africa.

“We are going to support the development of capacities of indigenous servicing providers to be able to take them to other oil economies. Since services provide over 15 per cent of Nigeria’s Gross Domestic Product (GDP), we should be able to delve into other climes.”