The fund, according to a statement issued yesterday, by the
NCDMB, was to incentivise companies that would operate in the NOGAPs and engage
in the manufacturing of equipment components used in the oil and gas industry
and linkage sectors.
Speaking at the signing ceremony in Lagos, the Executive
Secretary of NCDMB, Mr. Simbi Wabote, said the fund would support oil and gas
companies that would operate in the oil and gas parks developed by the board in
Bayelsa and Cross River States.
Wabote reiterated that the fund would only be accessed by
companies that take up spaces in the park to procure equipment or build their
manufacturing shopfloor within the park.
He pointed out that the NOGAPs manufacturing fund was
different from the initial $300 million fund being managed by BOI with five
product lines, which aims at supporting Nigerian businesses that contribute
their one percent to the Nigerian Content Development Fund.
He said the new fund would be a stand-alone product line
with distinct fund allocation and special eligibility criteria and collateral
structure.
According to Wabote, “the decision of the Board to establish
the product was informed by the peculiarities of the manufacturing sector,
which include infrastructure challenges, long gestation, long lead time before
returns, low margins on products, and high risk attached to the endeavor, in
addition to the reluctance of commercial banks to lend to the sector and
application of stiff collateral and eligibility criteria where loans are extended.”
On the criteria for accessing the NOGAPS manufacturing
funds, the Executive Secretary hinted that unlike the Nigerian Content
Intervention Funds which require companies to be contributors before they could
benefit, the NOGAPS fund could be accessed by companies that would be domiciled
and manufacture their products within the parks.
He said: “The Fund will provide loans to Nigerian companies
that meets the criteria to operate in any of the designated NOGAPS Industrial
Park for the purpose of financing manufacturing activities, purchase of fixed
assets, working capitals and logistic. “Beneficiaries will get a maximum single
obligor of $3m and minimum of single obligor of $250,000.00 with one-year
moratorium repayable within five years at five percent interest per annum.”
On the incentives available in the NOGAPS park, Wabote
disclosed that the rate for accommodation was reduced, power guaranteed, and
that the rent would only begin to count when the company commences
manufacturing.
In his remarks, the Managing Director, BOI, Mr. Olukayode
Pitan, applauded NCDMB for being a partner in progress, noting that the fund
would further help to promote in-country manufacturing as well as creation of
employment.
Pitan, pointed out that the interest rate would help companies
to easily access the product and payback. “The interest rates are very good
just like the initial fund which is less than ten percent and the same thing
will apply to this one. All we are looking for are Nigerians who want to
manufacture in Nigeria,” he said.
The BOI boss charged Nigerian companies to harness the
opportunity to pick up space within the park to produce locally.
However, on the sideline of the signing ceremony, the two
chief executives signed a supplementary memorandum of understanding for the
$300 million Nigerian Content Intervention Fund for extension of the agreement.
NCDMB established the NCI Fund in 2018, with the purpose of
financing oil and gas companies to increase capacity and grow Nigerian content
in the industry.
Presently, the NCI Fund has five product lines which are
being managed by the BOI, including, Manufacturing Finance -$10 million; Asset
Acquisition Finance -$10 million; Contract Finance -$5 million; Loan Refinance
-$10 million and Community Contractor Finance – N20 million.
The Board also has a $30 million Working Capital Fund for
oil and gas service companies and $20 million Fund for Women in Oil and Gas
Intervention Fund.
The last two facilities were administered by the Nigerian Export-Import Bank (NEXIM) Bank and the agreements were signed in mid-2021.