The Bank of Industry (BoI) and the Nigerian Content Development and Monitoring Board (NCDMB) have signed a Memorandum of Understanding to commence implementation of $200 million content intervention fund. The fund will assist indigenous companies participate and compete favourably in the Nigerian oil and gas sector.
Emmanuel Ibeh Kachikwu, Nigeria’s Minister Minister of State for Petroleum Resources which ministry oversees the affairs of NCDMD, stated at the signing ceremony on Thursday in Abuja that the Nigeria local content development which growth has been slow, can now pick up effectively with the lending support of the Bank of Industry.
“Over the years, Nigerian companies have found it difficult competing with their counterparts from jurisdictions where funding is accessible for 5% or less as compared to our market where bank lending rates hover around 20%.
”We are also going to be working with the Oil companies with regard to identifying core areas we could collaborate. For instance on Fabrication, we could identify four or five companies that are making waves and see what we could do for them,” Kachikwu said.
According to the Minister the ministry would focus on local industries with professionalism on pipe production, cable laying, contracting, IT issues.
There would also be need to segment all the aspect of the oil Industry that are active, and note the Nigerian companies that has the capacity to take ensure self sufficiency.
“Just like we are suing for self sufficiency in refining, we are also with this step rooting for self-sufficiency in contract modelling,” he said.
Ultimately, the only way to capture the benefits in the oil industry, he said, would not be to buy the crude and sell it. It is important to deepen local content participation and ensure that along the value chain all the benefits are harvested.
He noted the challenge of some Nigerian banks in providing long-term financing required by the local supply chain to build needed capacity. The banks also lack sufficient knowledge of the oil and gas sector.
“The pedigree and operating model of the Bank of Industry (BOI) is expected to close this gap,with the signing of the MoU,” Kachikwu said.
He pointed out that,”Although Local content has been moving on a sluggishly slow pace,the challenge is that we have not had enough funds to galvanise companies that had ideas,but don’t have money. Our banks are dailiy limited in terms of access to foreign exchange
Executive Secretary of NCDMB, Simbi Wabote, stated that “Before the Act, we had annual spend of $20 billion with little or nothing retained in-country. Today, I can confidently say that we spend $5 billion in-country every year. Before 2010, we targeted 4 pipe mills. Today we have 2 world-class pipe mills and 5 impressive pipe coating yards.
“Before 2010, only 3% of marine vessels are Nigerian owned; today, Nigerians control and own 36 percent of vessels that are used in the oil and gas industry. We had no active dry-dock facilities. The few we had were abandoned and left to rot away. Today, we have 4 active dry docking facilities for vessels – one each in PHC and Onne, and two in Lagos. Over 35,000 jobs have been created on the back of implementation of the Act”
In fabrication, he also noted that today Nigeria can handle fabrication capacity of more than 60,000 tonnes. He recalled a recent visit during which he went round to see the fabrication yards.
“Based on my findings, I can boldly say there is nothing we cannot fabricate in Nigeria,”he said.
Olukayode Pitan, Managing director of BoI, said the Bank would guide the local industries in measures they would take with regard to accessing the fund,stating further that due diligence must be followed in disbursing the fund for effective usage.
