The Nigerian Content Development and Monitoring Board (NCDMB), and the Bank of Industry (BOI), have launched a $50million fund for Nigerian Oil and Gas Parks (NOGAPS) Manufacturing Product Line.
A statement said the Fund is meant to incentivize companies that operate in the NOGAPS and engage in the manufacturing of equipment components used in the oil and gas industry and linkage sectors.
The statement quoted the Executive Secretary of the NCDMB, Simbi Wabote, as saying at the event in Lagos on Wednesday that the Fund will support oil and gas companies that will operate in the oil and gas parks developed by the Board in Bayelsa and Cross River states.
He reiterated that the fund would only be accessed by companies that take up spaces in the park to procure equipment or build their manufacturing shop floor within the park.
Wabote noted that the NOGAPS Manufacturing Fund is different from the initial $300m fund being managed by BOI with five product lines which aims at supporting Nigerian businesses that contribute their one per cent to the Nigerian Content Development Fund.
He explained that the new fund would be a stand-alone product line with distinct fund allocation and special eligibility criteria and collateral structure.
Wabote said: “The decision of the Board to establish the product was informed by the peculiarities of the manufacturing sector, which include infrastructure challenges, long gestation, long lead time before returns, low margins on products, and high risk attached to the endeavour.
“This is in addition to the reluctance of commercial banks to lend to the sector and application of stiff collateral and eligibility criteria where loans are extended.”
On the criteria for accessing the NOGAPS manufacturing funds, the NCDMB boss stated that unlike that Nigerian Content Intervention Funds (NCI Fund) which requires companies to be contributors before they can benefit, the NOGAPS fund can be accessed by companies that will be domiciled and will manufacture their products within the parks.
This is in addition to the reluctance of commercial banks to lend to the sector and application of stiff collateral and eligibility criteria where loans are extended.
“The Fund will provide loans to Nigerian companies that meet the criteria to operate in any of the designated NOGAPS Industrial Parks for the purpose of financing manufacturing activities, purchase of fixed assets, working capitals and logistic.
“Beneficiaries will get a maximum single obligor of $3million and minimum of single obligor of $250,000 with one year moratorium repayable within five years at five percent interest per annum,” he said.
Wabote listed other incentives available in the NOGAPS project to include reduced rate for accommodation, guaranteed power, while rent commences when the company commences manufacturing.
In his remarks, the Managing Director of BOI, Olukayode Pitan, applauded the NCDMB for being a partner in progress, noting that the Fund would further help promote in-country manufacturing as well as creation of employment.
Noting that the interest rate would help companies to easily access the product and pay back, Pitan added that the rates are very good and comparable to the initial fund which is less than 10%. All we are looking for are Nigerians who want to manufacture in Nigeria.”
He charged Nigerian companies to harness the opportunity to pick up space within the parks to produce locally.
