NCDMB, NEXIM Bank sign on US$30m MoU working capital fund for oil companies 

Chinazor Megbolu

The Nigerian Content Development and Monitoring Board (NCDMB) and Nexim Nigerian Export-Import Bank had signed a memorandum of understanding on the administration of US$30 million Working Capital Fund for oil and gas service companies.

The deal, which was signed on Wednesday in Abuja, the organisations said the idea of the Fund was mulled by the NCDMB towards supporting the operations of local oil firms against the adverse effects of Covid-19 pandemic.

They also added that loss of contracts due to low oil price and ensure the companies retain their personnel in employment was another factor for the fund.

The Executive Secretary, NCDMB, Engr. Simbi Wabote in remarks said the roll-out date is July 1, 2021.

He added that Nigerian Export-Import Bank would provide matching funds of the same amount in Naira.

“The scheme would cover loans for working capital support and capacity building, invoice discounting and capacity building, including acquisition of low-end equipment to service short-term contracts/service obligations,” he said.

Wabote further noted that the maximum amount that can be borrowed by a single obligor is US$1,000,000 or its Naira equivalent, while the tenor of the loan would be up to 12 months for Working Capital loans and up to 3 years for Capacity Building loans with moratorium of up to 12 months.

“The applicable interest rate shall be 5 percent per annum all-in for Dollar-denominated loans and 8 percent all-in per annum for Naira-denominated loans and the rate shall be fixed throughout the tenor of the loan.

Maximum processing time shall be 21 working days from the date the applicant has provided all required documentation.

”All applications for the fund shall be through the web and NEXIM shall develop and avail a dedicated portal to facilitate the process, with access given to designated NCDMB staff for monitoring and necessary functions,” Wabote said.

He explained that transactions that are eligible for funding support include those connected with oil service contracts, projects or contracts that boost the operations and viability of a qualifying service providers and transactions for the supply of low-end assets or other equipment for the execution of an oil service contracts from IOCs/ major loan by creditors.

Meanwhile, the Managing Director, Nigerian Export-Import Bank, Mr. Abubakar Bello also noted that the financial institution was partnering with NCDMB with a goal to support local service firms to export their services outside the country.

“As the oil and gas industry in other African countries open, the capacities that have been built over time in the Nigerian oil and gas sector can be exported to other African countries and even outside Africa.

“We are going to support the development of capacities of indigenous servicing providers to be able to take them to other oil economies. Since services provide over 15 percent of Nigeria’s Gross Domestic Product (GDP), we should be able to delve into other climes,” Bello said.

The Working Capital Scheme is one of the newly introduced products in the Nigerian Content Intervention Fund (NCI Fund) approved by the NCDMB Governing Council under the leadership of the Minister of State for Petroleum Resources, Chief Timipre Sylva.