11 July 2017

Nigerian Companies Yet to Fully Access U.S.$600 Million Local Content Fund, Seven Years After

More than seven years after the Nigerian Content Development and Monitoring Board (NCDMB) was set up, the agency is yet to disburse a reasonable chunk of the $600 million Nigerian Content Development Fund (NCDF) to local companies, THISDAY's investigations have revealed.

The $600 million NCDF, underpinned by Section 104 of the Nigerian Oil and Gas Industry Content Development (NOGICD) Act for developing capacity in the oil and gas industry, accumulated from one per cent value of all upstream contracts contributed by oil companies.

THISDAY gathered that since NCDF became operational, only three Nigerian companies-Lagos Deep Offshore Logistics base (LADOL), Starz and Vandrezzer have accessed the fund, as the process of accessing the facility, according to an indigenous operator, who spoke to THISDAY at the weekend, was "not only cumbersome but somewhat opaque."

"The NCDF model is a world-class model that is prevalent in other countries that have succeeded in developing local capacity. It accounted for the success of Norway, Korea and Brazil in local capacity building. Today, Norway is the undisputed leader in subsea welding to the extent that when the Macondo incident happened, former President Obama was advised to invite the Norwegian experts to cap the well, even though he insisted that Americans must do it and learn to develop the capacity. Korea has almost overtaken Brazil and Japan in ship-building because of cheaper labour that resulted from local capacity development. It is sad that the implementation of NCDF is plagued by the Nigerian system and so, funding remains a major challenge to local operators," he explained.

To ease access to the fund, the NCDMB in 2016 and the Bank of Industry (BOI) created the $100 million Nigerian Content Intervention Fund (NCI Fund) from the NCDF to provide funding for manufacturers, service providers and other key players in the Nigerian oil and gas industry.

By the terms of the agreement between the NCDMB and the BoI, the NCIF would be managed by the bank, which would lend directly to qualifying players in the oil and gas industry under competitive terms.

Under the old model of accessing the local content fund, the NCDF was designed to provide partial guarantees and 50 per cent interest rebate to service companies seeking to obtain facilities from commercial banks for asset acquisition and projects executio

But only three companies accessed the fund under the old funding regime as a result of the "cumbersome and opaque" processes put in place by the local content monitoring agency.

However, few months after the agreement between NCDMB and BoI was sealed, the then Acting Executive Secretary of the NCDMB, Mr. Patrick DazibaObah, who consummated the BoI transactions was removed, thus truncating the partnership.

But the current Executive Secretary of NCDMB, Mr. SimbiWabote explained at the weekend that the disbursement of NCIF to deserving companies was yet to start because his agency was working to perfect the governance process.

Speaking when he led a team of NCDMB to the new Managing Director of ExxonMobil Nigeria, Mr. Paul McGrath, the executive secretary stated that the Funds would only be disbursed through a banking process after proper risk assessments so as to create the needed confidence and trust.

Wabote urged ExxonMobil to begin early to engage the Board on the development of its Owowo field to enhance utilisation of in-country capacities.

He cautioned operating companies against engaging in single sourcing and selective tendering, stressing that reasons for such must be justifiable and discussed with the Board ahead of execution.

Wabote also warned companies against irregular spot hiring and utilisation of vessels under the guise of emergency.

Nigeria

Operators Kick Over 20-Plane Per Airline, Merger Calls

Airline operators have kicked over the proposal to benchmark the minimum planes a local airline should have in its fleet… Read more »

Copyright © 2017 This Day. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.

AllAfrica publishes around 900 reports a day from more than 140 news organizations and over 500 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.