100% Natural Herbs to Finally End Premature Ejaculation, Weak Erection and Small Manhood. Click Here Now .
Prior to now, indigenous operators and oil servicing companies represented by the Petroleum Technology Association of Nigeria (PETAN) and the Independent Petroleum Producers Group (IPPG) have often lamented the cumbersome nature and difficulty associated with accessing the NCI Fund.
Regrettably, the lack of funding support for local operators responsible for the paltry five percent Nigerian content in the oil and gas industry prior to 2010.
It was in view of this abysmal contribution by indigenous oil companies to the national crude oil basket that paved way for the establishment of the Nigerian Content Development Fund (NCDF), which is now known as NCI Fund under the Nigerian Oil and Gas Industry Content Development (NOGICD) Act 2010.
NCI Fund is a Nigerian Content Development and Monitoring Board (NCDMB) fund managed by Bank of Industry Limited (BOI).
The fund is designed to achieve the following strategic objectives; increase indigenous participation in the oil and gas industry, build local capacity and competencies, promote the growth and development of Nigerian Content in activities connected with sectors of the Nigerian oil and gas Industry.
Other objectives included, deepening the creation of linkages to other sectors of the national economy and boost industry contributions to the growth of Nigeria’s National Gross Domestic Product (GDP), address persistent funding challenges that have hindered capacity and growth of local service providers in oil and gas, facilitate the growth of community based companies in the upstream oil and gas sector, spur productivity and job creation in the oil and gas Industry and attract investment capital into the sector to boost contribution of the sector to Nigeria’s economic growth.
The NCI Fund represents the sum of 1 per cent from every contract awarded to any operator, contractor, subcontractor, alliance partner or any other entity involved in any project, operation, activity or transaction in the upstream sector. The money is to be deducted at source by contract awarding entities and paid into designated accounts kept with custodial banks under the programme.
At a recent stakeholders’ forum convened in Lagos recently to address the major challenges applicants contend with in processing their loan applications, the two agencies agreed that BOl may henceforth consider the inclusion of Insurance Bonds as collateral for accessing the Fund, provided the bonds are issued by competent and major insurance companies certified by the Bank.
The forum was chaired by the Executive Secretary of NCDMB, Engr. Simbi Wabote and the Managing Director of BOI, Mr. Olukayode Pitan, drew participation of 84 delegates from different companies.
Another consensus reached at the event was 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 was 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 will also consider increasing the single obligor limit for Refinancing from US$2m to between US$5m and US$10m, 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 Bank of Industry also committed to standardize 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, 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.
Review to boost indigenous capacity
With the review of the guidelines for accessing the $200m NCI Fund, the aspiration of the Federal Government to grow indigenous oil producers’ contribution to the national crude oil basket from the current 10 per cent to 30 per cent within the next five years may now be a low hanging fruit Minister of State for Petroleum Resources, Dr. Emmanuel Ibe Kachikwu, had at the closing ceremony of the maiden edition of the Nigerian International Petroleum Summit (NIPS) held in Abuja last February set the target.
According to him, the nation aspires to pump 2.5 million barrels of crude oil per day by 2023 and the expectation is that indigenous producers will contribute about 25 or 30 per cent of the projected volume.
But beyond the rhetoric of setting targets, the Federal Government should be ready to provide a soft landing for indigenous operators in exploration and production, oil service firms and Engineering Procurement Construction (EPC) by assisting to remove some of the stumbling blocks preventing them from moving beyond the current 10 per cent contribution to total crude oil production.
Some of the constraints confronting the operators include militancy, poaching, host community challenges, labour related issues and funding of oil and gas projects.
Soft landing for indigenous firms
Last July, the NCDMB disclosed that, the Nigerian Content Development Fund (NCDF) has grown to $650million from the previous figure of $600million.
NCDF General Manager, Mr. Obinna Ofili, had told reporters in Lagos that it has $200 million with the Bank of Industry (BoI) and $450 million in its purse.
Ofili said he was aware that between January and April, the Fund made $45million. He explained that the NCDF which is being funded from one per cent deductions of all contracts awarded in the upstream sector of the oil and gas industry, added that currently about 157 operators contribute to the Fund.
And to ensure that contracts were delivered based on timelines, while margins made by contractors were not subjected to loss as a result in delay for contract approvals, the Board recently sealed two Service Level Agreements (SLA) with the Indigenous Petroleum Producers Group(IPPG) and another with the Oil Producers Trader Section (OPTS) on how to reduce oil sector contracting cycle.
For its part, the Indigenous Petroleum Producers Group (IPPG) committed to signing the SLA with NCDMB to expand opportunities in the oil and gas industry.
The group equally pledged to support and comply with the provisions of the Nigerian Oil and Gas Industry Content Development (NOGICD) Act.
The new SLA is expected to commit members of the IPPG to comply with the Nigerian Content Act while the board will keep to a definite response time for reviews and approvals of contracting documentations. The SLA will take into consideration the capacity of the indigenous producing companies and provide necessary concessions as maybe necessary.
On the other hand, the SLA with the OPTS commits the 28-member companies to comply with the provisions of the Nigerian Oil and Gas Industry Content Development (NOGICD) Act, essentially to submit to NCDMB documents including their quarterly job forecasts, Nigerian content plans, bidders lists, Nigerian content evaluation criteria and Nigerian content technical bids, among other relevant information in relation to industry contracting and procurement cycles.
The board on its part pledged to respond on specific timelines and committed that should it fail to meet the set deadlines, the companies can proceed with their tendering processes after duly informing the board.