NNPC, Shell, banks okay $2.2b contract financing deal

Shell Companies in Nigeria (SCiN) and the Nigerian National Petroleum Corporation (NNPC) have signed Memoranda of Understanding (MoUs) with eight Nigerian banks under the reviewed Shell Contractors’ Support Fund.

Under the MoUs entered in Lagos, Access Bank, Skye Bank, Zenith Bank, Stanbic IBTC Bank, First Bank, Standard Chartered Bank, First City Monument Bank and Guaranty Trust Bank are to set aside $2.2 billion for contract execution by Nigerian firms.

In 2015 alone, SCiN spent about $900 million on local contractors.

A statement from the Corporate Media Relations Manager, Precious Okolobo, stated that the scheme would provide support for contractors to enable them to finance projects executed for SCiN in line with the aspirations of the Nigerian Content Act.

Okolobo explained that to access these funds, the contractors must have a valid purchase order and meet the banks’ risk assessment criteria. This new version is in response to market realities and will offer loans faster and at cheaper rates.

The Managing Director of the Shell Petroleum Development Company of Nigeria Limited (SPDC) and Country Chair of SCiN, Osagie Okunbor said at the signing ceremony in Lagos that supporting Small and Medium Enterprises (SMEs) under this scheme was for the mutual benefit of 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 said.

The Finance Manager, Nigeria and Gabon, Guy Janssens, added that funding was essential to enable contractors to deliver and grow. He also urged the banks to make the scheme work.

The Managing Director, Shell Nigeria Exploration and Production Company (SNEPCo), Bayo Ojulari, advised the contractors to perform to build trust and grow.

The Group General Manager, National Petroleum Investment and Management Services (NAPIMS), Dafe Sejebo, implored the banks to make the loan facilities available to the vendors when they come for them.

In the same vein, the Chairman of the Petroleum Technology Association of Nigeria (PETAN), Mazi Bank-Anthony Okoroafor, enjoined the banks to be realistic in their demands to engender easier access to the funds.

One of the contractors, Moritz Abazie of Strides Energy and Maritime Limited urged that the rates charged should be comparable to those 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. Till date, the six participating banks have disbursed a total of $1billion to over 220 vendors.