The Nigerian Content Development and Monitoring Board (NCDMB) said it has achieved 30 per cent per cent Nigerian content in the oil and gas industry as at 2017 and with plans to increase it to 70 per cent by 2027.
According to the Nigeria content regulator, the milestones achieved so far is due to the availability of financing through the Nigerian Content Intervention Fund (NCI-Fund) as the NCDMB clocks 10 this year.
The Nigerian Content Act established the Nigerian Content Development Fund (NCDF) for purposes of funding the implementation of Nigerian content development.
The Act states that “One per cent of every contract awarded to any operator, contractor, sub-contractor, alliance partner or any other entity involved in any project, operation, activity or transaction in the upstream sector of the Nigerian oil and gas industry shall be deducted at source and paid into the Fund.”
Breaking down the head-twisting legalese, it simply means one per cent of all contracts in the upstream sector is reserved for the NCDF. Out of the NCDF pool, the Board set aside the sum of $200 million for local vendor development.
This amount is the Board’s NCI-Fund. The products of the NCI-Fund are Manufacturing, Asset Acquisition, Contract Financing, Loan Refinancing and Community Contractors Loan Scheme.
The Community Contractor a novel offering of the intervention fund as it seeks to provide access to loans for contractors from the core Niger Delta states. The Fund answers to the money factor in the development of Nigerian content because without access to finance, companies will be hard pressed to execute contracts.
Speaking with LEADERSHIP, oil industry expert, Precious Okolobo stated that banks have continued to play their role in the value chain, but nobody should be taken in by the glitz and glam of altruism; a bank remains a bank, driven by profits and process.
Initially, the $200-million NCI-Fund was disbursed by commercial banks but in 2017, soon after Simbi Wabote assumed office as the 3rd executive secretary, the NCDMB signed an agreement with the Bank of Industry (BoI) to manage the fund.
According to Okolobo, “This was a smart move. The BoI is Nigeria’s oldest development finance institution, having commenced operations in 1959 as the Investment Corporation of Nigeria (ICON) Limited.
“To date, the BoI has disbursed a total of $158.46 million and N7.31 billion to 26 beneficiaries representing 91 per cent of the NCI-Fund. The disbursements cover manufacturing, asset acquisition, contract finance and loan refinancing.”
Effective April 1, 2020, the NCDMB cut the interest rate from 8 to 6 per cent per annum, extended loan tenors and payment moratorium. Under the palliative regime, loans with tenor of three years will be extended by six months, while those with a tenor above three years will get a grace period of 12 months.
“The performance of the NCI-Fund has been encouraging as the loanees are paying up and not defaulting. This is the impetus we need to bring community contractors on board so the march to 70 per cent Nigerian content by 2027 becomes unstoppable,” Okolobo added.