The Nigeria Content Development and Monitoring Bank (NCDMB) and the Nigeria Export-Import Bank (NEXIM) have signed a $30 million agreement on Capital and Capacity building Fund for the oil and gas sector servicing.
This was disclosed by the Executive Secretary of NCDMB, Mr. Simbi Wabote during the signing ceremony in Abuja.
According to Wabote, the fund would go a long way to stabilise both sectors. Clarifying his stand, Wabote said: “I want to commend Oil Producers Trade section (OPTS) because 98 per cent of the funds that we utilize 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.
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Wabote further explained that the scheme would cover loan for working capital support, capacity building, invoice discounting and capacity building including acquisition of low end equipment to service contracts and service obligation. Explaining the intricacies involved in the deal, Wabote said: “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 further added.
Naijabusiness.com.ng understands that these time lines had been agreed. In addition, all application would be through a web and NEXIM would develop a dedicated portal to facilitate the process.
On the other hand, 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. According to him:“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 concluded.
