By Emmanuel Addeh
The federal government has approved the expansion of the Nigerian Content Intervention Fund (NCIF), instituted in 2017 and managed by the Bank of Industry (BoI), from its current $200 million to $350 million.
The Governing Council of the Nigerian Content Development and Monitoring Board (NCDMB) said yesterday that the fund would facilitate on-lending to qualified stakeholders in the Nigerian oil and gas industry on five loan product types.
The NCI Fund is a portion of the Nigerian Content Development Fund (NCDF), aggregated from the one per cent deduction from the value of contracts executed in the upstream sector of the oil and gas industry.
About 94 per cent of the NCI Funds has been disbursed to 27 beneficiaries as at May 2020 while the board has received new applications from 100 firms for nearly triple the size of the original fund.
Guidelines for the NCI fund provide that beneficiaries of the manufacturing loan and asset acquisition loan can access a maximum of $10 million respectively.
Also, beneficiaries of contract finance loan can access $5 million, while those interested in the loan re-financing package can access $10 million, with beneficiaries of the community contractor finance scheme limited to N20 million.
In April 2020, as a result of the COVID-19 pandemic, the governing council approved the reduction of the interest rate from eight to six per cent per annum for all four of the loan products and extended the moratorium for all loan products.
Minister of State for Petroleum Resources, Chief Timipre Sylva, said yesterday that the enlargement of the fund by $150 million was part of the decisions taken at the NCDMB governing council meeting which he chaired.
“During the meeting, the council approved that $100 million from the additional funds would be deployed to boost the five existing loan products of the NCI Fund, which include manufacturing, asset acquisition, contract financing, loan refinancing and community contractor financing.
“Similarly, the council approved that $20 million and $30 million respectively should be deployed to two newly developed loan product types – the Intervention Fund for Women in Oil and Gas and PETAN Products, which include working capital loans and capacity building loans for PETAN member companies,” he said.
The NCDMB has also given its assent for the establishment of a $50 million Nigerian Content Research and Development Fund (NCRDF) for sustainable funding of the board’s mandate on research and development.
It said its decision was enshrined in Sections 37 to 39 of the Nigerian Oil and Gas Industry Content Development (NOGICD) Act 2010, which empowers it to superintend over research activities in the oil and gas industry.
According to the organisation, the move will help institutionalise a robust R and D ecosystem that will lead to the continuous development of technology, materials, and process for industry applications from indigenous research efforts.
“Nigeria spends about 0.2 per cent of its Gross Domestic Product (GDP) on R and D and this indicates a poor commitment, resulting in over-dependence on foreign technology for critical economic development activities, including oil and gas operations”, it said.
It added that the fund is expected to close the gap and will be applied in four broad intervention areas, namely: research, the establishment of centres of excellence in academic and research institutes, sponsorship of commercialisation of research and sponsorship of endowment of a professorial chair.
“The operating model has been designed to ensure a transparent and well-focused application of the fund and it includes a governance structure to leverage experienced researchers and industry experts in the decision-making process of selecting activities to be funded from the fund which will be domiciled in a TSA Sub-Account in CBN.
“The NCDMB will put in place an outcome-focused performance metrics that will measure success in the application of the fund and form part of the reporting template to the governing council on an ongoing basis,” it noted.