The Managing Director of Arco Group Plc Mr. Alfred Okoigun has applauded the recently signed Memorandum of Understanding for a $2.2 billion contractor financing support between Shell Companies in Nigeria (SCiN), its Joint Venture Partner-NNPC and eight Nigerian banks.
The amount to be managed by Access Bank Plc, Skye Bank Plc, Zenith Bank Plc, Stanbic IBTC Bank, First Bank of Nigeria Limited, Standard Chartered Bank, First City Monument Bank (FCMB), and Guaranty Trust Bank Plc is being set aside to provide loanable funds for Small and Medium-sized Enterprises (SMEs) to enable them finance projects being executed for Shell Companies in Nigeria.
According to Okoigun, there is evidence that the new scheme is an improvement on the existing method of loan disbursement to vendors working with Shell companies adding that it is a milestone initiative that will stimulate the development of local content in the oil and gas sector
The MoU setting aside loanable funds for SMEs, the Arco MD/CEO adds, is indeed a far-reaching move by Shell and NNPC to reduce to the barest minimum, obstacles to credit that Nigerian companies regularly face in the process of handling contracts for an oil major like Shell.
“In our 36 years in business, we have always advocated for policies like this to accelerate in-country capacity growth in Nigeria,” Okoigun says, adding that Arco, a major player in the oil and gas sector is satisfied that Shell has been undertaking several initiatives in recent years in order to give effect and lend credence to the Nigerian Oil and Gas Content Development Act of 2010.
“For us in Arco this is a very strong indication of Shell’s support for local content law. It is an indication by Shell to genuinely develop local capability in the country,” Okoigun notes.
According to Okoigun, Shell Petroleum has been active in supporting local content law in Nigeria adding that examples of what the company is doing on the growth of local capacity are all over the place in the country’s oil and gas industry.
“We see this initiative by Shell as a commitment to identify with Nigeria at this critical period of recession.
“We expect all the oil majors in Nigeria to emulate this giant step by Shell and NNPC because such a move is a win-win situation for all the stakeholders in the oil and gas sector in the country. The indigenous SMEs in the sector would have been properly empowered to deliver on the contracts awarded to them. The oil major would be able to make realistic forecasts on execution of its contracts,” the Arco Group boss stresses.
Okoigun argues that the eight banks involved would be in brisk business with minimum risks because of the availability of funds for contract execution in the oil and gas industry. This, he observes, would help to reduce the current financial stress being experienced in the sector with more employment generated and a growing economy in the long run.
While using Arco to enjoin all the parties to the MoU to make deliberate efforts to ensure that the initiative takes firm root and becomes a norm in the oil and gas business in Nigeria, Okogun enjoined the banks to anchor their own side of the business according to the letters and the spirit of the MoU in particular and the objectives of the local content law in general. “It will be up to companies that will benefit from the scheme,” he stresses, “to justify the confidence reposed in them by being diligent and timely in the execution of contracts awarded to them.
“In fact, the action being taken by Shell Companies in Nigeria and NNPC ought to be the template for contract execution in the oil and gas sector in Nigeria.”
“Arco wants the Federal Government to borrow the template of Shell to expand in-country capacity building. The beauty of it is that if you are not doing genuine business you cannot have access to this type of fund.
In addition, Arco feels that this type of scheme would reduce the time spent in probes and investigations of people looting the nation’s treasury through phony contracts and would go a long way to reduce the insecurity and tension arising from unemployment.
Adds Okoigun: “As we commend Shell for this, the nation should take advantage of this move to explore ways of supporting local entrepreneurs in large number as China and India have been doing.
“Arco uses this opportunity to re-emphasize the need for the Federal Government to support the development of industrial parks around the country as being contemplated by the Ministry of Industry.
“We in Arco think that it is only when we embark on enduring business models that the nation can come out of her present economic predicament.”