The Nigerian Content Development and Monitoring Board (NCDMB) and the Petroleum Technology Association of Nigeria (PETAN) yesterday signed an agreement on US$30m Working Capital Scheme that would support operations of oil companies against adverse effects of COVID- 19 pandemic and loss of contracts due to low oil price.
The board which stated this in a late night statement issued yesterday, noted that Executive Secretary of NCDMB, Engr. Simbi Kesiye Wabote and the Chairman of PETAN, Mr. Nicolas Odinuwe signed the Memorandum of Understanding (MoU) on the credit scheme in Abuja.
The Working Capital Scheme is one of the newly introduced products in the Nigerian Content Intervention Fund (NCI Fund) approved by the NCDMB Governing Council under the leadership of the Minister of State for Petroleum Resources, Chief Timipre Sylva. Key features of the credit scheme are single obligor limit of One Million US Dollars, tenor of 365 days after 90 days moratorium and eight percent interest per annum for Naira and five per cent for United States Dollars.
In his remarks at the event, the Executive Secretary explained that the fund which was currently domiciled with the Bank of Industry would bridge the oil companies’ cash flow gaps, support operations and prevent staff layoffs in the industry.
He said the Scheme would be triggered whenever the oil price of $40/ barrel benchmark was reached and whenever there were such negative impact on the industry.
“The $40/barrel trigger point strategy is important considering the rapidly changing nature of the oil and gas industry,” he said.
Providing details on the eligibility of beneficiaries, Wabote stated that loans granted under the Scheme would enable the beneficiaries to manage operating expenses related portfolio of oil and gas operations, bridge payment delays and restock inventory.
The Funds will also be applied in acquiring and maintaining assets, expansion or renovation related to ongoing projects for which working capital is being sought and refinancing of loans.
To further guarantee the security of funds, the Executive Secretary indicated that “Insurance Guarantee covering 120 per cent of the loan has to be issued to NCDMB by the intending beneficiary.
The Board will also demand a Letter of Sponsorship and Guarantee by PETAN and Irrevocable Standing Payment order issued by Beneficiary Bank.”