A $200 million (N61 billion) fund to finance contracts obtained by Nigerian firms in the oil and gas sector has been launched. The fund called the Nigerian Content Intervention Fund (NCIF) is owned by the Nigerian Content Development and Monitoring Board (NCDMB) and would be disbursed by the Bank of Industry (BoI). The interest for loans granted from the fund has been pegged at not more than 8 per cent for companies and five per cent for host community contractors.
The Minister of State, Petroleum Resources, Dr. Ibe Kachikwu expressed optimism that the fund would enable more local companies to participate in the oil and gas industry by providing them with cheap funding to execute contracts and set up manufacturing companies to service the sector. He said government’s target is to grow the fund to $1 billion in the next five years.
He explained that the essence of the fund is to help galvanize local companies to put in competitive bids for projects in the industry by having funds at single digit interest rate. He pointed out that although $200 million is small for an industry that spends about $16 billion annually on projects, the fund will ginger everybody working in the sector and hopefully expand the fund. Kachikwu said he also expects big players in the industry to seek out ways of also supporting the fund to grow it to the $1 billion target.
Stressing that the IOCs have a moral responsibility to help local players to grow by holding their hands and guiding them to become established, he charged those administering the fund to ensure that there is a geographical spread to the companies benefiting from the fund, adding that cutting edge technology firms and community based companies should also be targets for the fund. The Minister noted that the target is to make it possible to fabricate all technology needed by the industry in-country in the next 10 years.
The Executive Secretary of NCDMB, Simbi Wabote hinted that deployment of the fund could create about 300,000 jobs in both upstream and downstream sectors of the petroleum industry as he disclosed that the industry has witnessed capital flights of $380 billion since inception. Wabote said before the Nigerian Content Act, the industry annual spend was $20 billion with very little or nothing retained in the country. He stated that currently, value retention in-country is at 26 percent with the target of growing it to 70% in the next 10 years which would translate into $14 billion of the $20 billion yearly spend.