The Nigeria Content Development and Monitoring Bank (NCDMB) and the Nigeria Export Import Bank (NEXIM) have signed agreement for $30million Capital and Capacity building Fund for the oil and gas sector servicing.
Mr Simbi Wabote, the Executive Secretary of NCDMB,explained said at the signing ceremony that the fund would stabilise the sector.
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.
According to him,the 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.
He 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.
He added:“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 is 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.
He 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 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.
