The Nigerian Content Development and Monitoring Board (NCDMB) and the Petroleum Technology Association of Nigeria (PETAN) recently executed an Agreement on a US$30m Working Capital Scheme that will support the operations of Nigerian Oil Service Providers against the adverse effects of both COVID-19 pandemic and loss of contracts due to low oil price.
The Working Capital and Capacity Building Fund will be managed by the Nigerian Export-Import Bank (NEXIM), which would facilitate on-lending to qualified Nigerian Oil Service Providers (NOSPs), which belong to a professional Association in the Nigerian Oil & Gas industry recognized by NCDMB - either PETAN or the Oil & Gas Trainers Association of Nigeria (OGTAN).
The loans under the Scheme will provide liquidity to beneficiaries and enable them have adequate working capital to manage other operating expenses related to their portfolio of oil and gas operations and restocking of inventory. The Funds will also be applied to acquisition and maintenance of low-end assets and/or expansion or renovation related to ongoing oil-servicing contracts/projects requiring funding.
The partnership between NCDMB and NEXIM under the scheme is in accordance with the mandates of both organisations towards the promotion and development of Services-related companies to effectively compete domestically and internationally, especially against the backdrop of the African Continental Free Trade Agreement (AfCFTA). The synergy is also in realization of the growing influence and dominance of the Services sector with contribution of over 50% to the Gross Domestic Product (GDP).
Objectives of the Scheme
The Working Capital & Capacity Building Fund is designed to achieve the following strategic objectives:
- Boost indigenous participation in the Oil & Gas industry and build local capacity and competencies.
- Promote the growth and development of Nigerian Content in the provision of services to the Nigerian Oil and Gas Industry.
- Address persistent funding challenges that have constrained capacity and growth of local service providers in Oil & Gas-related activities.
- Facilitate growth of Host Community-based companies in the provision of Services to the upstream Oil & Gas sector.
- Enhance productivity and job creation in the Oil & Gas Industry.
- Attract investment capital into the sector and boost contribution of the sector to Nigeria’s economic growth.
- Enhance skill acquisition and competences as well as rating to undertake export of Services in Oil & Gas-related activities.
Eligible Applicants and Beneficiaries include;
- Duly registered/incorporated companies in Nigeria.
- Commercially viable and have contract relationship with IOC/major NOC.
Eligible transactions to qualify for funding support under this Scheme shall include:
- Transactions connected with Oil service contracts;
- Contracts to boost the operations and viability of a qualifying NOSP
- Transactions for the supply of low-end assets and/or other equipment relating to the execution of an oil services contract from IOCs/NOCs.
All applications under the Scheme shall be online through a dedicated Portal created by NEXIM for the scheme. Applications, with full documentary requirements, shall be processed to disbursement within 21 working days.
All applications shall be accompanied by the underlisted Certified True Copies (CTC) of the following documents;
- Incorporation documents
- Contract/Payment Invoice
- Proforma Invoice, where applicable
- Copy of latest Audited Accounts/ Financial Statements
- Financial Summary Sheet (as per template)
- Completed Questionnaire/Checklist
- Assignment of contract
- Domiciliation of Proceeds/Assignment of receivables
- Irrevocable Standing Payment Order (ISPO) from Receiving Bank(s)
- Assignment of receivables
- Association Guarantee from PETAN or OGTAN
- Insurance cover with NCDMB/NEXIM noted as loss payees
- Registration of Invoices/Movable Assets with National Collateral Registry