Oil and Gas Financing through the Nigerian Content Intervention (NCI) Fund.
The Nigerian Content Intervention Fund is a pool of funds made available by the Nigeria Content Development and Monitoring Board (NCDMB) to be managed by the Bank of Industry (BOI) to meet the funding needs of indigenous manufacturers, service providers and other key players in the Nigerian Oil and gas Industry. It is sourced from the Nigerian Content Development Fund (NCDF) created by section 104 of the Nigerian Oil and Gas Content Development Act (NOGICD) Act.
The fund is designed to achieve the following strategic objectives:
- To increase indigenous participation in the oil and gas industry, build local capacity and competencies.
- To promote the growth and development of Nigerian Content in activities connected with sectors of the Nigerian oil and gas Industry.
- To deepen the creation of linkages to other sectors of the national economy and boost industry contributions to the growth of Nigeria’s National Gross Domestic Product.
- To address persistent funding challenges that have hindered capacity and growth of local service providers in oil and gas.
- To facilitate the growth of community-based companies in the upstream oil and gas sector.
- To spur productivity and job creation in the Oil and Gas Industry.
- To attract investment capital into the sector and boost contribution of the sector to Nigeria’s economic growth.
This fund was created because of the desire to re-engineer the operations of the NCDF, increase access to funding and grow indigenous participation in the oil and gas industry. Other motivations behind the creation of the fund are to increase access to NCDF, to provide single digit interest loan and to enhance competitiveness of indigenous companies servicing the oil and gas industry.
The funds will be accessible to contributors to the NCDF as well as community contractors of any of the oil producing communities.
The fund will boost local content participation in the Oil and Gas Industry by promoting the production and utilization of locally manufactured goods and services in the Nigerian oil and gas industry. It will also address the persistent funding challenges that have hindered capacity and growth of local service providers in oil and gas industry and spur productivity and job creation in the oil and gas industry.
Applicants interested in the NCI Fund will have access to funding for Manufacturing loans, Asset acquisition (Plants, Facilities, Rigs, Marine Vessels and other ancillary equipment excluding landed assets), Contract Finance (provision of loan facilities to oil & gas companies which are contributors to the Nigerian Content Development Fund (NCDF) and intend to finance contracts from IOCs (indigenous companies in the case of community contractors), Community contractor and finance scheme and also loan re-financing (The loan types that are available for refinancing include working capital loans, term loans, leasing facilities. However, the facility must be performing, viable and well secured). The facility types that can be accessed under the NCI Fund are term loans, Working Capital, Invoice Discounting and Leasing Facility.
The maximum amount an applicant can access (single obligor limit) for Manufacturing Loan is US$10million, for Asset acquisition Loan, US$10million, for Contract finance Loan, US$5million, for Community Contractor Finance Scheme, N20million and for Loan Re-financing is US$2million
It was stated that an applicant cannot have two different loans running simultaneously.
The maximum tenor for all loan types is 5 years and the interest rate for the loan types is 8% except for Community Contractor Finance Scheme which is 5%.
Applications can be routed only through the BOI/NCIF portal (www.boi.ng/ncifund) and not through the bank.
Upon submission of the application, it takes forty-five (45) working days to access the loan. This is subject to fulfillment of all terms and conditions and contract confirmation from an International Oil Company (IOC), where applicable.
Different documents are required for the different types of loan available (this can the accessed on the website) but a major requirement for all loan types is a detailed Feasibility Report containing the following:
- Introduction & Background: This shows information on the company’s activities since incorporation, biographies of shareholders of the company and their percentage shareholding, project concept which is the need for the project and the detailed project description.
- Requirements & Evaluation: This session includes details of the project cost as well as the proposed financing plan with realistic assessment and evidence of availability of funds from each source, Details of existing assets and the value as well as cost incurred on the proposed project till date, Installed capacity and a detailed analysis of the annual cost of production and cash flow and balance sheet projections for at least the first five years with relevant assumptions, Detailed technical information covering technology, production process etc., Comprehensive list of machinery required, giving detailed specifications, source(s) and prices, Details of utility requirements and availability of essential services such as water, power, transport around the project site, Detailed information on raw material requirements, their sources and unit cost, Comprehensive list of manpower requirements broken down into categories and salaries, List, qualification and position and annual salary of existing management and staff (for expansion projects only), Detailed market study report.
For on-going projects, give the existing, Expansion/Diversification and Consolidated projections covering Profit and Loss Accounts, Cash Flow Analysis and Balance Sheets for the period of five (5) years. Also provide the detailed information/data and assumptions used in the above projections.
Check out our Guide to Developing “Bankable” Feasibility Reports which would be useful in achieving this: