Lagos — Nigeria's top oil producer and prospector, Shell, wants to empower indigenous companies in the Niger Delta by making loan finance available to them and, thus, contribute to the development of the region, a company source has told allAfrica.com.
Other goals include strengthening the profile of local companies in the oil industry and achieving more effective technology transfer to Nigerian partners.
The Shell Petroleum Development Company last week announced the creation of a $30 million revolving loan facility for its contractors of Niger Delta origin operating in the region. It said the fund had been created in collaboration with the International Finance Corporation (IFC), the World Bank arm responsible for lending to the private sector.
Also to be involved is a local bank in Nigeria, yet to be named. Each of the participating institutions will contribute US$10 million to the funding of the project. Shell's contribution to the fund will be provided by one of its wholly-owned subsidiaries that is located outside Nigeria.
"We are talking about the development of the Niger Delta, and everybody - the stakeholders - are concerned," said the source; "One way of doing it is to enhance the ability of the of the people of the area to contribute to the development of the area," he added.
There have recently been calls for increased local involvement in the Nigerian oil industry, currently put at less than 15 per cent in the onshore areas, and less than five per cent in the deep offshore regions, which require advanced technologies.
"If you want Nigerians to play an active role, then you cannot ignore the contractors," the source explained.
Shell awarded to foreign companies the development of its Bonga field, in a deep offshore region. This has been criticised in Nigeria, and is being investigated by the Nigerian National Assembly.
A statement by Precious Omuku, Shell's Corporate External Relations Manager, said: "The loan facility will target small and medium-scale entrepreneurs, either locally-owned or employing indigenous Delta people, engaged in services such as mechanical and petroleum engineering and design, software development, pipeline maintenance, and environmental work."
The World Bank will administer the provision of the medium-term loans to qualifying indigenous contractors providing services to Shell in the Niger Delta.
The loans will be repaid through proceeds from contracts to Shell in the Niger Delta, according to Shell. It explained that the three participants - Shell, the World Bank, and yet-to-be named Nigerian bank - would share the commercial risks.
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The transfer of technology attempted under this scheme will be complemented by another programme that Shell and the IFC are currently supporting, aimed at capacity building and provision of technical assistance to local contractors.
"Over time, it is envisaged that the benefit of these initiatives will be seen in a stronger base of local contractors able to compete more effectively in the provision of a wider range of high value services, and positioned to generate higher returns to the local economy," the statement said.
Shell leads the oil sector in Nigeria, being the premier prospecting and producing firm in the country. It currently accounts for nearly half of Nigeria's total crude production of about two million barrels per day.
