In response to multiple complaints by qualified oil and gas service companies over tough conditions of accessing the $200 million Nigerian Content Intervention Fund (NCI Fund), the Nigerian Content Development and Monitoring Board (NCDMB) and the Bank of Industry (BoI) have moved to relax some of the conditions.
The steps which aims at easing the accessibility of the fund, were unanimously agreed upon at a stakeholders meeting by NCDMB and BOI. The forum which was chaired by the Executive Secretary of NCDMB, Simbi Wabote and the Managing Director of BoI, Olukayode Pitan, was held to address the major challenges applicants face in processing their loan applications.
The NCDMB and BoI unanimously agreed that the BOI may consider the inclusion of insurance bonds as collateral for accessing the fund, provided the bonds are issued by competent and major insurance companies qualified by the Bank.
More so, there was consensus that BoI should accept other forms of collateral outside of bank guarantees, which are listed against each loan type and applicants that have unencumbered collateral acceptable to the BoI can access the NCI Fund loan without recourse to bank guarantee.
A key resolution is that an applicant can access loans for two different categories or product types, subject to the applicable single obligor limit under the scheme. The NCDMB said it will also consider increasing the single obligor limit for refinancing from $2 million to between $5 million and $10 million, particularly because many companies that attended the forum have such needs.
It was also agreed that there would be no discrimination between international oil companies and national oil companies, rather the history and performance of the Nigerian oil companies will be considered by the BoI when taking a decision.
The BoI also committed to standardising the conditions for obtaining bank guarantees from each commercial bank and this shall be issued to each applicant at the point of application to guide and speed up their pursuit of the document.
As part of efforts to ease access to the NCI Fund, the BoI would no longer insist on appointing a director on the board of borrowers; but would rather place an officer to monitor the project financed by the loan.
About the fund
The NCI Fund is a portion of the Nigerian Content Development Fund (NCDF) set aside by the NCDMB for 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.
The available types of funding under the NCI Fund include loans for manufacturing, asset acquisition, contract finance, community contractor finance and loan refinancing.
One per cent of all contracts, subcontracts, projects and activities in the upstream sector of the Nigerian oil and gas industry is statutorily to be deducted and remitted to the NCDF, as stipulated by Section 104 of the Nigerian Oil and Gas Industry Content Development (NOGICD) Act of 2010.
