The Nigerian Content Development and Monitoring Board (NCDMB) and the Bank of Industry (BOI) have scheduled meetings with oil and gas service companies, community contractors and commercial banks in a bid to address the factors responsible for the slow disbursement of the US$200 million dollars Nigerian Content Intervention Fund (NCI Fund).
NCI Fund is a portion of the Nigerian Content Development Fund (NCDF) set aside by the NCDMB for the BOI to manage and lend directly to indigenous manufacturers, service providers and other key players in the oil and gas industry, to meet their funding needs.
One percent of all contracts awarded in the upstream sector of the Nigerian oil and gas industry is deducted and remitted to the NCDF as stipulated by Section 104 of the Nigerian Oil and Gas Industry Content Development (NOGICD) Act.
The Director, Finance and Personnel Management (NCDMB), Mr. Isaac Yalah confirmed the meetings on Monday in Lagos during a capacity building workshop organized by the Board for energy and business editors. The consultations would hold in August and September.
The engagement with oil firms, he explained, is specifically for applicants to the NCI Fund whose submissions have been incomplete for a while, to discuss the challenges they have with completing their applications. The Board and BOI would also meet community contractors to foster wider participation from them in the NCI Fund. “There is need for town hall meetings with community contractors is to know why they are not applying for the loans as expected,” he said.
The session with managing directors of commercial and micro finance banks is also intended to find ways to understand their requirements for quicker issuance of Bank Guarantees (BG) needed for processing applications for the NCI Fund.
According to Yalah, the Board is dissatisfied with the low number of companies and community contractors that have accessed the $200m NCI Fund since it was launched in August 2017 and released to BOI. He stated that only about $10.55m which is less than 10 percent of the NCI Fund has been disbursed. “We are concerned about the poor accessibility of the NCI Fund. We will engage the companies that have tried and others seeking to apply to discuss the way around the challenges.”
The NCI Fund covers Manufacturing Loan, Asset acquisition, Contract Finance, Community contractor finance scheme and Loan re-financing and they have a maximum tenor of 5 years. Applicants seeking loans for Manufacturing and Asset acquisition can access $10million at 8 percent interest rate while applicants for Contract finance Loan can access $5million also at 8 percent interest rate. Loan Re-financing applicants can access $2million at 8 percent interest rate whereas community contractors can get N20million, repayable at 5 percent interest rate.
In his presentation, the General Manager, Nigerian Content Development Fund and Treasury Management, (NCDF&TM) Mr. Obinna Ofili explained that about $45m was remitted by operating and service companies to the NCDF Account between January and April 2018. He stated that remittances to the Fund increased because of the third party forensic audit which the Board plans to commission, which would reveal companies that are in default of NCDF payments.
Ofili disclosed further that the NCDF Account has a current balance of $450m and is domiciled in the Central Bank of Nigeria’s TSA Account aside the $200m NCI Fund with the BOI.
He also stated that the Board is also using the NCDF to build local capacity in the industry. “We are using portions of the NCDF to support the development of modular refineries, NOGAPs, Pipemill and training programmes that the Board sponsor.”
The capacity building workshop also featured presentations from Dr. Austine Nweze and Mr. Chido Nwakanma, faculty members of the School of Media & Communications, Pan-Atlantic University. They spoke respectively on the Current Trends & New Themes in Energy and Business Reporting and Strategies & Techniques for Effective Media Coverage of the Energy Sector in Nigeria: The NCIF Dimension.