By Edith Ike-Eboh
The Nigeria Content Development and Monitoring Bank (NCDMB) and Nigeria Export Import Bank (NEXIM) signed an agreement on a $ 30 million capital and capacity building fund to serve the oil and gas sector.
“I want to congratulate the Petroleum Producers Trade Section (OPTS) because 98 percent of the funds we use in the NCDMB come from the OPTS members who generate this money for us.
“I know the OPTS and the Independent Petroleum Producers Group (IPPG) at one point raised before the NCDMB this ability of most indigenous entrepreneurs to provide services to them due to funding issues, especially when we have been struck by COVID-19.
“I remember receiving several letters in particular from the IPPG trying to see how we are supporting this and I also remember receiving a similar letter from the Petroleum Technology Association of Nigeria (PETAN) when COVID-19 hit.
“And most people have nothing more to do because the businesses were shut down and most were threatening to downsize and start their payrolls.
“On this basis, we then set up a committee to see how we can support, so this financing plan is a working capital intervention that happens with the NEXIM bank, our other intervention fund is still with the Bank of Industry (BOI) and it was very successful with almost 98 percent compliance in terms of loan repayment.
“Thus, the date of deployment of this new program should be July 1, 2021 and the size of the fund is 30 million dollars and it will be reinforced by a matching fund of the same amount which will be provided by the NEXIM bank in naira,” to be converted at the official exchange rate in force.
“So anything that the NCDMB puts on the table will be matched in terms of naira with NEXIM bank to support the provision of working capital to those who provide services in the oil and gas sector,” he said. .
He said the program would cover a loan for working capital support as well as capacity building, invoice updating and capacity building, including procurement of low-end equipment for service contracts. and the obligation of service.
He said the fund would also cover, under project categories, bill discounting, petroleum service contracts, capacity building, including financial counseling and literacy, as well as the acquisition of equipment. and low-end assets that the fund could accommodate.
Wabote noted that the target market includes Nigerian oil service providers owned by a Nigerian oil and gas industry trade association and commercially viable in a business relationship with CIOs or indigenous oil and gas producers.
“The maximum amount that can be borrowed by a single debtor is one million dollars or its equivalent in naira at the official exchange rate in effect at the time of borrowing.
“The term of office can be up to 12 months for working capital loans and up to three years for capacity building loans for a moratorium of up to 12 months.
“The applicable interest rate will be five percent per annum for all denominations in foreign currency and eight percent per annum for loans denominated in Naira and the rate will be fixed for the duration of the loan.
“The maximum processing time agreed with NEXIM will be 21 working days from the date on which the applicant has provided all the required documents broken down as follows: 12 working days for the processing of the loan request by NEXIM, five working days for NCDMB approval for the loan approved by NEXIM and the rest for disbursement by NEXIM, ”he said.
He said that these deadlines had been agreed upon; adding that all applications would be made through a website and that NEXIM would develop and use a dedicated portal to facilitate the process.
He noted that for the sake of transparency, no requests should reach the NCDMB, adding that all requests should be directed to NEXIM bank, in the same way as the NCDMB does with the BOI.
He said access would be granted to NCDMB members for monitoring and for other functions necessary to ensure all protocols are followed.
Wabote said the eligibility transaction for the fund included transactions related to oil and gas service contracts, contracts that boost operations and the viability of eligible members.
Others are transactions for the supply of low income assets and other equipment for the execution of oil and gas contracts for CIOs, indigenous and national oil companies.
“The requirement for a combination of guarantees will cover loans under the scheme listed as follows, invoices certified by NEXIM, the association guarantee, when we obtain all the necessary documents proving that such an association is viable, the assignment of contracts, the guarantee of cooperation are also considered by NEXIM.
“The irrevocable direct debit of the product is also part of the requirement, the irrevocable standing payment order from the receiving banks will also be considered as part of the requirement and the insurance coverage with NCDMB and NEXIM rated as beneficiaries.
“Each party to the program, NCDMB and NEXIM will bear 50% of the credit risk for the repayment of the loan and will be entitled to an equal share of the interest income, each month,” he said.
Wabote said that after provision for 0.5 percent of the capacity building of NEXIM operators, he will further remit interest on the undisbursed portion of the fund to NCDMB.
He said NEXIM would also provide the intellectual work and facilities for the joint monitoring of loan utilization and project execution by NCDMB and NEXIM and maintain separate account books for the program.
He said the relevant NCDMB office will have access to it from time to time.
“The NCDMB will be responsible for appointing external auditors who would conduct statutory audits for the scheme on an annual basis, in accordance with the law.
“This whole process has been submitted to the board of directors of the NCDMB and approved as what needs to be done to support the oil and gas industry,” he added.
He said the fund could be seen as an intervention by President Muhammadu Buhari to keep the oil and gas sector afloat after the impact of COVID-19, as had been done for other sectors of the economy.
He congratulated the Minister of State for Petroleum Resources, Chief Timipre Sylva, for supporting the delivery of the program.
In his remarks, NEXIM chief executive Mr. Abba Bello said the bank was happy to be part of the fund to ensure services were afloat in the oil and gas sector.
He said it would surprise many if NEXIM was involved in oil and gas issues, but that was because the service was also exportable.
“As the oil and gas sectors of other African countries in particular open up, the capacities that we have built over time in the Nigerian sector become exportable to African countries and oil economies.
“We are very happy to be a part of this and we will support the development and capacity building of indigenous service providers to be able to take them to other oil economies.
“We believe that services provide more than 15% of Nigerian GDP, we should be able to venture into other climates, this partnership with NCDMB is a step towards our aspiration to bring services to the continent and eventually to the world market, ”he said. mentionned.
Nigeria News Agency reports (NAN) that representatives of PETAN and OPTS and other stakeholders congratulated NCDMB bank and NEXIM for the gesture (NAN)
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