The Nigerian Content Development and Monitoring Board (NCDMB) has said it has grown the local content of operations in Nigeria’s oil and gas industry to 42 per cent in the last 10 years from less than 10 per cent prior to that.
This is as the board has fully disbursed the $300 million Nigerian Content Intervention Fund (NCIF) to about 53 indigenous operators in the oil and gas industry.
General manager, Corporate Communication & Zonal Coordinator, NCDMB, Dr. Ginah O. Ginah, who spoke in Abuja, said the board is also targeting to grow from the current 42 per cent to 70 per cent by 2027, even as it faces stiff challenges in view of the global energy transition which is set to reduce Nigeria’s level of crude oil extraction.
Speaking at the Nigerian Content Capacity Building Workshop for media stakeholders, in Abuja, Dr Ginah said the board would continue to support Nigerian companies operating in the industry to play increasing role in the sector.
He pointed out that though the global push for energy transition was casting doubt on the future of oil production, Federal Government’s policy on gas as transition energy provided a huge opportunity for local operators.
“At the NCDMB, we believe strongly that the world would witness energy mix or redistribution rather than an outright swap of fossil fuels to renewable energies”, he stated, adding that “what is more important is how we react to these emerging developments.
“The game is now changing, the goal post has shifted because we cannot continue with the extraction of crude oil as we’d been doing before, which means we have reduced field to play, we are left with the gas part of the industry and we need to ramp up our operations in that direction if we are to maintain the phenomenal rise of the 42 per cent so that in the year 2027 we will be able to reach that 70 per cent and beyond,” Dr Ginah said
in his presentation , general manager of the Nigerian Contents Development Fund (NCDF), Mr Obinna Ofili, noted that there had been no single default on the loan repayment by the beneficiaries. He said the decision to give the Bank of Industry (BOI) the responsibility of disbursing the funds was to eliminate banks with very deep profits motive, explaining that although the loan was initially given out at 8 per cent, but because of the Covid-19 meltdown, it was reduced to 6 per cent, lowest in the country.
To grow Nigerian content in the industry, the federal government had launched the initial $200 million fund for Nigerian companies involved in manufacturing in the oil and gas industry as well as firms seeking to acquire assets, especially rigs and marine vessels.
The beneficiaries who got a maximum of $10 million, repayable after five years, according to the guidelines, could spend it on contract financing for Nigerian oil service providers, contract financing for oil and gas community contractors and contract and loan refinancing for service companies that already have facilities with Nigerian banks.
The fund is a portion of the NCDF drawn from one per cent of all contracts awarded in the upstream sector of the industry and was meant to address persistent funding challenges that hindered capacity and growth of local service providers in the oil and gas companies have so far accessed loans with present number at 53.
It was later expanded from $200 million to $350 million, with $100 million from the additional funds deployed to boost the five existing loan products of the NCI fund, which include manufacturing, asset acquisition, contract financing, loan refinancing and community contractor financing. Also included was the $20 million and $30 million respectively for the Intervention Fund for Women in Oil & Gas and Petroleum Technology Association of Nigeria (PETAN) products, which included working capital loans and capacity building loans for member companies.
There is no bad loan under the scheme presently as all the loans are performing and meeting their obligations. “Three companies have so far fully liquidated their loans. Loan disbursement presently stand at over 100 per cent of the fund size as BOI is already re-lending recovered loans paid back by initial borrowers under the scheme,” he said.
Ofili noted that before the intervention, many companies were dying under the weight of high interest rates, saying that since its launch, many beneficiaries had gone on to build a number of the infrastructure now being used in the industry. He added that three companies who accessed the fund had fully repaid, even before expiry, with the rest having never defaulted in their monthly remittances.