Nigerian Companies Yet to Fully Access $600m 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, AKINZGIST’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.
AKINZGISTgathered 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 AKINZGIST 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.
Promote Your Music, Video, Comedy Skit Here On silicongist.com.ng Call Only:- 08141507715
Click to comment

Leave a Reply

Your email address will not be published.

WordPress spam blocked by CleanTalk.
To Top