Shell Companies in Nigeria (SCiN), supported by the Nigerian National Petroleum Corporation (NNPC), have signed Memoranda of Understanding (MoUs) with eight Nigerian banks under the refreshed Shell Contractors’ Support Fund (SCSF), as part of efforts to improve access to finance for Nigerian vendors and suppliers in the oil and gas industry.
Under the MoUs, which were signed in Lagos, Access Bank, Skye Bank, Zenith Bank, Stanbic IBTC Bank, FirstBank, Standard Chartered Bank, First City Monument Bank and Guaranty Trust Bank are to set aside $2.2 billion for contract execution by Nigerian firms.
The scheme would provide support for contractors to enable them finance projects executed for SCiN in line with the aspirations of the Nigerian Oil and Gas Industry Content Development (NOGICD) Act.
To access these funds, the contractors must have a valid purchase order and meet the banks’ risk assessment criteria. This refreshed version is in response to market realities and will offer loans faster and at cheaper rates.
Osagie Okunbor, Country Chair of SCiN, who is also the Managing Director of Shell Petroleum Development Company of Nigeria Limited (SPDC), said supporting SMEs under this scheme is for the mutual benefit all the parties.
“While the scheme reduces the pressure from requests for advance payments from contractors on us, it also ensures optimum delivery by our contractors, leaving the banks with a de-risked client base in addition to the comfort of domiciliation of payments,” he stressed.
Guy Janssens, Finance Manager, Nigeria and Gabon of Shell, added that funding was key to enable contractors deliver and grow, urging the banks to make the scheme work.
Bayo Ojulari, Managing Director, Shell Nigeria Exploration and Production Company (SNEPCo), advised the contractors to perform in order to build trust and grow.
Dafe Sejebo, Group General Manager, National Petroleum Investment Management Services (NAPIMS), who was represented by Bunmi Lawson, implored the banks to make the loan facilities available to the vendors when they come for them.
In the same vein, Bank-Anthony Okoroafor, Chairman, Petroleum Technology Association of Nigeria (PETAN), enjoined the banks to be realistic in their demands in order to engender easier access to the funds.
Responding, one of the contractors, Moritz Abazie of Strides Energy and Maritime Limited, requested that the rates charged should be comparable to that for credit sourced overseas so that they could fairly compete with foreign firms in bidding for jobs.
The idea of a Contractor Funding Scheme started in 2011 with the Shell Kobo Fund, which gave rise to the Shell Contractor Support Fund in 2012.
The scheme has been redesigned to address the current economic exigencies and to align it with stakeholder needs by merging the two initial initiatives.
To date, the six participating banks have disbursed a total of $1 billion to over 220 vendors.
In 2015, Nigerian companies undertook about 93 percent of all contracts awarded by Shell Companies in Nigeria, which amounted to US$0.9 billion.
Read more at http://independentnig.com/local-oil-gas-vendors-to-get-2-2bn-finance-from-shell-banks/#EuzeEOqCuCVKRIsu.99
