BOI, NCDMB Launch $50m Fund to Boost Equipment Manufacturing in Oil, Gas Sector

The Nigerian Content Development and Monitoring Board (NCDMB) and the Bank of Industry (BOI) have launched a $50-million fund for the Nigerian Oil and Gas Parks (NOGAPs) manufacturing product line.

The fund, according to a statement issued yesterday, by the NCDMB, was to incentivise companies that would operate in the NOGAPs and engage in the manufacturing of equipment components used in the oil and gas industry and linkage sectors.

Speaking at the signing ceremony in Lagos, the Executive Secretary of NCDMB, Mr. Simbi Wabote, said the fund would support oil and gas companies that would operate in the oil and gas parks developed by the board in Bayelsa and Cross River States.

Wabote reiterated that the fund would only be accessed by companies that take up spaces in the park to procure equipment or build their manufacturing shopfloor within the park.

He pointed out that the NOGAPs manufacturing fund was different from the initial $300 million fund being managed by BOI with five product lines, which aims at supporting Nigerian businesses that contribute their one percent to the Nigerian Content Development Fund.

He said the new fund would be a stand-alone product line with distinct fund allocation and special eligibility criteria and collateral structure.

According to Wabote, “the decision of the Board to establish the product was informed by the peculiarities of the manufacturing sector, which include infrastructure challenges, long gestation, long lead time before returns, low margins on products, and high risk attached to the endeavor, in addition to the reluctance of commercial banks to lend to the sector and application of stiff collateral and eligibility criteria where loans are extended.”

On the criteria for accessing the NOGAPS manufacturing funds, the Executive Secretary hinted that unlike the Nigerian Content Intervention Funds which require companies to be contributors before they could benefit, the NOGAPS fund could be accessed by companies that would be domiciled and manufacture their products within the parks.

He said: “The Fund will provide loans to Nigerian companies that meets the criteria to operate in any of the designated NOGAPS Industrial Park for the purpose of financing manufacturing activities, purchase of fixed assets, working capitals and logistic. “Beneficiaries will get a maximum single obligor of $3m and minimum of single obligor of $250,000.00 with one-year moratorium repayable within five years at five percent interest per annum.”

On the incentives available in the NOGAPS park, Wabote disclosed that the rate for accommodation was reduced, power guaranteed, and that the rent would only begin to count when the company commences manufacturing.

In his remarks, the Managing Director, BOI, Mr. Olukayode Pitan, applauded NCDMB for being a partner in progress, noting that the fund would further help to promote in-country manufacturing as well as creation of employment.

Pitan, pointed out that the interest rate would help companies to easily access the product and payback. “The interest rates are very good just like the initial fund which is less than ten percent and the same thing will apply to this one. All we are looking for are Nigerians who want to manufacture in Nigeria,” he said.

The BOI boss charged Nigerian companies to harness the opportunity to pick up space within the park to produce locally.

However, on the sideline of the signing ceremony, the two chief executives signed a supplementary memorandum of understanding for the $300 million Nigerian Content Intervention Fund for extension of the agreement.

NCDMB established the NCI Fund in 2018, with the purpose of financing oil and gas companies to increase capacity and grow Nigerian content in the industry.

Presently, the NCI Fund has five product lines which are being managed by the BOI, including, Manufacturing Finance -$10 million; Asset Acquisition Finance -$10 million; Contract Finance -$5 million; Loan Refinance -$10 million and Community Contractor Finance – N20 million.

The Board also has a $30 million Working Capital Fund for oil and gas service companies and $20 million Fund for Women in Oil and Gas Intervention Fund.

The last two facilities were administered by the Nigerian Export-Import Bank (NEXIM) Bank and the agreements were signed in mid-2021.

March 10, 2023