Shell
Companies in Nigeria (SCiN) and its Joint Venture (JV) Partner, Nigerian
National Petroleum Corporation (NNPC) have signed a $2.2 billion contractor
financing support with eight Nigerian banks.
The Memorandum
of Understanding (MoU) floated under the refreshed Shell Contractors’ Support
Fund, according to parties is aimed at improve access to finance for Nigerian
vendors and suppliers in the oil and gas industry.
The MoU involving;
Access Bank, Skye Bank, Zenith Bank, Stanbic IBTC Bank, First Bank, Standard
Chartered Bank, First City Monument Bank and Guaranty Trust Bank, will see them
set aside $2.2 billion for contract execution by Nigerian firms.
The scheme
provides support for contractors to enable them finance projects executed for
SCiN in line with the aspirations of the Nigerian Content Act.
To access
these funds, the contractors must have a valid purchase order and meet the
banks’ risk assessment criteria. The refreshed version, according to Shell is
in response to market realities and will offer loans faster and at cheaper
rates.
Managing
Director of the Shell Petroleum Development Company of Nigeria Limited (SPDC)
and Country Chair, SCiN, Mr. Osagie Okunbor, explained at the Mou signing that
supporting Small Medium Enterprises (SMEs) under the scheme is for the mutual
benefit of all 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 said.
Shell’s
Finance Manager, Nigeria and Gabon, Mr. Guy Janssens, added that funding is key
to enable contractors deliver and grow while also urging the banks to make the
scheme work.
Managing
Director, Shell Nigeria Exploration and Production Company (SNEPCo), Mr. Bayo
Ojulari, advised the contractors to perform in order to build trust and grow
their businesses.
The Group
General Manager, NAPIMS, Mr. Dafe Sejebo, who was represented by Bunmi Lawson,
implored the banks to make the loan facilities available to the vendors when
they come for them.
In his
remarks, the Chairman of the Petroleum Technology Association of Nigeria
(PETAN) , Mazi Bank-Anthony Okoroafor, 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 of 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 $1billion to over 220 vendors.
In 2015, 93
percent of all contracts awarded by SCiN were undertaken by Nigerian companies
amounting to US$0.9billion
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