MD Shell Mr. Mutiu Sunmonu
Ernest Chinwo in Port Harcourt
The implementation of the Nigerian Content Act received a boost recently as the Shell Petroleum Development Company of Nigeria Limited (SPDC) signed a memorandum of understanding to set up a $5 billion fund to ease access to loans by local contractors.
The company said the initiative, tagged: “Shell Contractors Support Funding Scheme,” was aimed at placing its contractors at the frontline for service delivery to the oil and gas industry and actualise the Nigerian content target.
Speaking during the official launch of the scheme in Port Harcourt, Managing Director of SPDC, Mr. Mutiu Sunmonu, said Shell would continue to support local vendors through the award of contracts and capacity development.
Sunmonu noted that five of its partner Nigerian financial institutions namely - Access Bank, First Bank, Citibank, Fidelity Bank and Standard Chartered Bank will each contribute $1 billon to the fund while David L Ross Associates would be the technical partners.
He said: “The scheme we are launching today is worth much more than $5billion. So, I will therefore expect that we stretch our delivery and performance far beyond what was achieved by the Americans when they landed on Mars.”
“I want to see Nigerian contractors build the first floating production storage and offloading vessel in Nigeria. I want to see Nigerians undertaking daunting technological challenges,” Sunmonu said, noting that the skills abound in the country.
The SPDC boss explained that with the scheme, financing of projects, which had been a major challenge to contractors’ growth and participation in the delivery of goods and services to the oil and gas industry would be greatly reduced.
“The banks have committed to relaxing the collateral security requirement, reducing interest rates and shortening the processing time. The lower interest rate should enable contractors establish their competitive advantage and become global players,” Sunmonu said.
He therefore charged the contractors not to default on loan repayment and to apply the funds to agreed-upon projects, saying, “At full capacity, Nigeria operations can contribute a significant proportion of the global energy requirement and that the $5billion fund would play a key role in achieving the desired aspirations.
Reacting to the development, the Group Managing Director and Chief Executive Officer of Access Bank Plc, Aigboje Aig-Imoukhuede, said in an interview that his bank was ready to drive the implementation of the Nigerian Content Act to empower local contractors.
He said his bank was in a solid financial standing to finance projects under the scheme and expressed the desire to increase its funding from $1 billion to $3 billion over a period.
He added: “It is a pleasure to join in making history. It is a rare honour because this will definitely redefine Nigeria and Africa, and it is good that Nigeria is the one leading in this push. We must congratulate the corps of Shell contractors who will now be moving from the bottom of the ladder to middle and then top of the industry. Access Bank Plc is top on this move.
“A study has shown that three principles work together to transform an economic entity, viz: Commitment, capacity and competence. We have an abiding belief that you contractors are key to the oil industry and Access is committed to delivering value. Nigeria is a key country and oil is a key product.
“We have capacity to deliver what we have signed in the MoU. We have a balance sheet in excess of $10 billion and so, our capacity to take on huge financing in the oil sector is not in doubt. Oil and gas is one of the ways we can truly kick-start the Nigerian economy, and we are solidly positioned in the sector. We have over 300 branch network in Nigeria plus others outside Nigeria especially the UK.
Aig-Imoukhuede said the MoU was unique because the banks took pains to ascertain the capacity of the local contractors to execute Shell contracts and their ability to repay loans.
“Shell spent several times with us brainstorming on this; first of all to establish the commitment of the banks in this scheme, the commitment of the five banks they selected. They tried to get the views of the banks on the contractors, to know if the banks viewed the contractors as credible, if they had capacity not just to execute a Shell contract but also to borrow responsibly,” he said.
The Executive Secretary, Nigeria Content Development and Monitoring Board, Mr. Ernest Nwapa, said Shell was the leading IOC partner in implementing the local content law.