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Highly-leveraged firms unable to access NCDMB $200m NCI Fund

By Stanley Opara
12 December 2018   |   4:12 am
Most of the companies open to the Nigerian Content Development and Monitoring Board’s (NCDMB) $200 million Nigerian Content Intervention...

[FILES] Executive Secretary, Nigerian Content Development and Monitoring Board (NCDMB), Simbi Wabote. PHOTO: SweetCrudeRepors

• $21m disbursed to creditors already
Most of the companies open to the Nigerian Content Development and Monitoring Board’s (NCDMB) $200 million Nigerian Content Intervention (NCI) Fund, are having difficulties accessing the Fund owing to the fact that they (the firms) are highly levered to banks.

But the NCDMB is putting finishing touches to the remodeling of the Fund, and this is targeted at facilitating access to the Fund by such firms, according to findings by The Guardian.

Highly leveraged firms have very high level of debt relative to their equity. High leverage amplifies profits but it also amplifies losses, which makes it risky to the firms’ creditors.

They are also susceptible and sensitive to changes in business conditions and/or interest rates and are generally more likely to find it difficult to repay their debt if either or both changed.

The NCDMB also identified dearth of projects as a major challenge facing local firms, as such development is capable of driving them out of business. This is evident in the level of idle capacities being experienced by most yards in Nigeria.

The Executive Secretary, NCDMB, Simbi Wabote, reeling a scorecard of the Board’s performance in 2018, said on the $200 million NCI Fund launched to provide funding support to local service companies, $21 million has been given out as loan to beneficiaries as at the end of October.

“In 2019, we intend to develop and launch our investment policy to further provide flexibility to our funding and investment interventions,” he said.

At the recently concluded 8th Practical Nigerian Content Forum, held in Bayelsa, he also hinted that NCDMB had in 2018 taken 30 percent equity in the 5,000 barrels per day modular refinery in Ibigwe, Imo State, and commenced the construction of oil and gas parks at Bayelsa and Cross River States.

On the provision of constant power to the parks, Wabote said a thermal power plant was being constructed by the Nigerian Agip Oil Company (NAOC), which would also serve the oil and gas park in Bayelsa state while discussions are ongoing to source electricity from the NIPP station in Odukpani, Cross River State, to supply the park situated close-by.

Other plans for 2019 include the finalisation of the review of Offshore Rig Acquisition Strategy, and posting of 20 trained marine personnel being trained by the Board, for their one year international sea time in fulfilment of the requirement for the Certificate of Competency (CoC).
Wabote also reported that the Board has commenced the forensic audit of remittances to the Nigerian Content Development Fund, and fulfilled its promise to put in place 3rd party monitors to enhance compliance monitoring in the upstream, midstream, and downstream sectors of the industry.

He added that “By 2019, we intend to deepen and widen the roll-out of third party monitoring service providers for effective monitoring of the 51 operating companies, and close to 8,000 oil and gas service providers registered on our NOGIC-JQS. In addition, we will further expand our compliance and enforcement framework to cover marginal field operators, midstream and downstream sectors.”

He said the Board had established collaborative efforts with the Nigeria Customs Service, Economic and Financial Crimes Commission (EFCC), and Nigerian National Petroleum Corporation (NNPC), National Petroleum Investment Management Services (NAPIMS), other are Nigeria Immigration Service (NIS), Federal Airport Authority of Nigeria (FAAN), Oil and Gas Free Zones Authority (OGFZA), National Judicial Council and Nigerian Maritime Administration and Safety Agency (NIMASA), and would sharpen those inter-agency collaborations going forward.
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