- Companies to get $30 intervention
The Nigerian Content Development and Monitoring Board (NCDMB), the Nigerian Export-Import Bank (NEXIM) Oil Producers Trade Section (OPTS) and the Petroleum Technology Association of Nigeria (PETAN) yesterday, stressed the need to address challenges facing the oil and gas sector in the country.
Executive Secretary of NCDMB, Simbi Wabote, who said financial intervention remained a challenge to the sector, especially services, disclosed that an intervention fund of $30 million has been set aside in collaboration with NEXIM bank to assuage challenges experienced by the companies.
The intervention fund, which will be matched by the bank, would commence on July 1, 2021.
Wabote disclosed that OPTS contributes about 90 per cent of the board’s fund, adding that there is about 85 per cent compliance loans repayment by the oil and gas sector.
According to him, the scheme would cover loans for Working Capital support and capacity building, invoice discounting and capacity building, including the acquisition of low-end equipment to service short-term contracts/service obligations
Wabote, noted that the financial support was necessary given the COVID-19 challenges that almost made most oil service companies shut down, adding that the development would compliment the current support to the private sector, as the oil and gas sector did not receive intervention like others.
Wabote said: “There have been a lot of intervention in other sectors, agriculture, airline operation, and all the rest of them but nothing was done with the oil and gas sector. This is like the administration’s intervention in the oil and gas sector, to keep the sector, from collapse and ensure that they continue to provide service to the oil and gas industry.”
He noted that product categories available under the scheme included working capital; invoice discounting; oil service contracts; capacity building (including financial advisory/ literacy) and low-end equipment/asset acquisition.
Wabote said the target market comprises Nigerian Oil Service Providers, which belong to a professional Association in the Nigerian Oil & Gas industry (such as PETAN and OGTAN) and commercially viable with a business relationship with either an IOC or major NOC.
“Maximum amount that can be borrowed by a single obligor is $1,000,000 or its Naira equivalent at the official exchange rate prevailing at the time of borrowing.
Tenor shall be up to 12 months for Working Capital loans and up to three years for Capacity Building loans with a moratorium of up to 12 months. The applicable interest rate shall be 5 per cent per annum all-in for Dollar-denominated loans and 8 per cent all-in per annum for Naira-denominated loans and the rate shall be fixed throughout the tenor of the loan,” he said.
Managing Director of NEXIM Bank, Abba Bello said the bank is committed to supporting local companies, especially in the oil and gas sector.
Bello, who said service companies contribute close 50 per cent of the nation’s Gross Domestic Product said there is a need to continue to support the sector.
He noted that there was a need to position Nigerian oil service providers to export services as other African countries strive to develop their sectors.
Chairman of PETAN, Nik Odinuwe said the intervention would save the sector and enable the companies to stay afloat.
He also noted that the move would boost local content and stop the industry from downsizing in the face of prevailing challenges.
Representative of OPTS at the event, Joseph Ofili equally expressed optimism over the move, describing as the right step for the industry.
