NIGERIA’S Content Development and Monitoring Board (NCDMB) and the Bank of Industry (BoI) have launched a $50 million fund to support local equipment manufacture in the oil and gas industry.
The fund, The ICIR learnt, was meant to incentivize companies that would be operating in the Nigerian Oil and Gas Parks (NOGAPS) and engaging in the manufacturing of equipment components used in the oil and gas industry, and in linkage sectors.
Speaking at the signing ceremony in Abuja today, the Executive Secretary of NCDMB, Simbi Kesiye Wabote, mentioned that the fund would support oil and gas companies that would be operating in the oil and gas parks developed by the Board in Bayelsa and Cross River states.
Wabote explained that the fund would only be accessed by companies that take up spaces in the park to procure equipment or build their manufacturing shopfloor within the park.
He pointed that the NOGAPS manufacturing fund is different from the initial $300 million fund being managed by the BoI with five product lines that aim at supporting Nigerian businesses that contribute their one per cent to the Nigerian Content Development Fund.
The new fund would be a stand-alone product line with distinct fund allocation and special eligibility criteria and collateral structure.
According to Wabote, “The decision of the Board to establish the product was informed by the peculiarities of the manufacturing sector, which include infrastructure challenges, long gestation, long lead time before returns, low margins on products, and high risk attached to the endeavour, in addition to the reluctance of commercial banks to lend to the sector and their application of stiff collateral and eligibility criteria where loans are extended.”
On the criteria for accessing the NOGAPS manufacturing funds, the Executive Secretary hinted that unlike the Nigerian Content Intervention Fund which requires companies to be contributors before they can benefit, the NOGAPS fund can be accessed by companies that will be domiciled and manufacture their products within the parks.
He said, “The Fund will provide loans to Nigerian companies that meet the criteria to operate in any of the designated NOGAPS Industrial Park for the purpose of financing manufacturing activities, purchase of fixed assets, working capitals and logistic. Beneficiaries will get a maximum single obligor of $3 million, and a minimum of single obligor of $250,000, with one year moratorium repayable within five years at five per cent interest per annum.”
On the incentives available in the NOGAPS park, Wabote disclosed that the rate for accommodation is reduced, power is guaranteed, and the rent would only begin to count when the company commences manufacturing.
The Managing Director, BoI, Olukayode Pitan, noted that the fund would further help promote in-country manufacturing, as well as creation of employment.
Pitan pointed that the low interest rate would help companies to easily access the product and pay back.
He said, “The interest rates are very good, just like the initial fund which is less than 10 per cent, and the same thing will apply to this one. All we are looking for are Nigerians who want to manufacture in Nigeria.”
He charged Nigerian companies to harness the opportunity to pick up space within the park to produce locally.
The Board established the NCI Fund in 2018 with the purpose of financing oil and gas companies to increase capacity and grow Nigerian content in the industry.
The NCI Fund has five product lines which are being managed by the BoI. They are Manufacturing Finance, $10 million; Asset Acquisition Finance, $10 million; Contract Finance, $5 million; Loan Refinance, $10 million; and Community Contractor Finance, N20 million.
The Board also has a $30 million Working Capital Fund for oil and gas service companies, and a $20 million Fund for Women in Oil and Gas Intervention Fund.
The last two facilities are administered by the Nigerian Export-Import Bank (NEXIM), and the agreements were signed in mid-2021.
On the sideline of the event, the two chief executives signed a supplementary memorandum of understanding for the $300 million Nigerian content intervention initiative.
Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.