FG increases Nigerian Content Intervention Fund to US$350M

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FG increases Nigerian Content Intervention Fund to US$350M

…US$50 million Nigerian Content Research & Development Fund approved

The Governing Council of the Nigerian Content Development and Monitoring Board (NCDMB) has approved the expansion of the Nigerian Content Intervention Fund from US$200 million to US$350 million.

The enlargement of the Fund by US$150 million was part of decisions taken at the recent NCDMB Governing Council meeting, which held virtually on June 16, 2020. The meeting was chaired by the Minister of State for Petroleum Resources, Chief Timipre Sylva, who is the Chairman of the Council.

The Council approved that US$100 million from the additional funds would be deployed to boost the five existing loan products of the NCI Fund, which include manufacturing, asset acquisition, contract financing, loan refinancing and community contractor financing.

Similarly, the Council also approved that US$20 million and US$30 million respectively should be deployed to two newly developed loan product types – the Intervention Fund for Women in Oil & Gas and PETAN Products, which include Working Capital loans and Capacity Building loans for PETAN member companies.

The NCI Fund was instituted in 2017 as a US$200 million Fund managed by the Bank of Industry (BoI), engaged to facilitate on-lending to qualified stakeholders in the Nigerian Oil and Gas industry on five loan product types.

The NCI Fund is a portion of the Nigerian Content Development Fund (NCDF), aggregated from the one percent deduction from the value of contracts executed in the upstream sector of the oil and gas industry. About 94 per cent of the NCI Funds has been disbursed to 27 beneficiaries as at May 2020. NCDMB has received new applications from 100 companies for nearly triple the size of the original fund.

Guidelines for the NCI Fund provide that beneficiaries of the Manufacturing Loan and Asset acquisition Loan can access a maximum of US$10 million respectively. Also, beneficiaries of Contract finance Loan can access US$5 million while beneficiaries of the Loan Re-financing package can access US$10 million, with beneficiaries of the Community Contractor Finance Scheme limited to N20 million.

The maximum tenure for all loan types is five years and applicants cannot have two different loans running simultaneously.

At the onset of the Fund, the applicable interest rate for the various loan types was pegged at eight percent, except the Community Contractor Finance Scheme, which was five percent.

However in April 2020 as part of NCDMB’s response to mitigate economic impact of the coronavirus pandemic, the Governing Council approved reduction of the interest rate from eight to six percent per annum for all four of the loan products. The Board also extended the moratorium for all loan products.

MEANWHILE, the Governing Council of the Nigerian Content Development and Monitoring Board (NCDMB) has approved the establishment of a US$50 million Nigerian Content Research & Development Fund (NCR&DF).

The Minister of State for Petroleum Resources, Chief Timipre Sylva, approved the deployment of $50million Research Fund for sustainable funding of NCDMB’s mandate on Research & Development as enshrined in Sections 37 to 39 of the Nigerian Oil and Gas Industry Content Development (NOGICD) Act 2010, which empowers NCDMB to superintend over R&D activities in the oil and gas industry.

NCDMB is implementing the Research and Development Roadmap to institutionalize a robust R&D ecosystem that will lead to continuous development of technology, materials and process for industry application from indigenous research efforts.

A major success pillar is closing systemic weakness of inadequate funding architecture for R&D activities in the Oil and Gas industry.

Nigeria spends about 0.2% of its Gross Domestic Product (GDP) on R&D and this indicates a poor commitment to R&D, resulting in over-dependence on foreign technology for critical economic development activities, including oil and gas operations.

The NCDMB R&D Fund is expected to close this gap and will be applied in four broad Intervention areas, namely-Research (basic and applied), establishment of Centers of Excellence in Academic and Research Institutes, Sponsorship of commercialization of Research and Sponsorship of endowment of professorial chair.

The operating model has been designed to ensure transparent and well-focused application of the Fund and it includes a Governance structure to leverage experienced researchers and industry experts in the decision-making process of selecting activities to be funded from the NCDMB R&D Fund. The Fund will be domiciled in a TSA Sub-Account in CBN.

The NCDMB will put in place an outcome focused performance metrics that will measure success in the application of the Fund and form part of the reporting template to the Governing Council on an ongoing basis

Following the Governing Council approval, the Nigerian Content Research and Development Council (NCRDC) held a meeting on June 25 and revalidated the identified focus areas for the utilization of the Fund. The council also decided that the Fund would also be deployed in developing and implementing a Communication strategy for effective dissemination of NCDMB R&D interventions as part of stakeholder management process.

The NCRDC also approved the institution of a Performance management strategy to track progress and ensure application of the R&D fund in line with the key performance indicators (KPI) approved by the Governance Council.

It also approved the list for distribution of the smart gas leak and smoke detector alarm device for field trial. The product which was conceptualised by Amal Technologies is a research prototype sponsored by NCDMB

The scope of NCDMB’s R&D regulatory role includes development of capabilities for Research and Innovation in Nigeria including facilities, equipment, personnel and processes, review and approve R&D plans of operating companies, monitor implementation of R&D projects to ensure the execution of Nigerian content requirements of domiciliation within Nigerian R&D Centers.

Other roles include tying R&D spend to addressing industry technology, material, and process challenges and facilitating commercialization of research breakthroughs and Facilitating the deployment of successful products of research in industry Operations.

To achieve its R&D mandate NCDMB developed the R&D framework anchored on seven policy thrust, including focus on market driven research, establishment of world class Research and Development (R&D) Centers of Excellence, establishment of Research and Development Council and provision of sustainable funding to support Research and Development.
Other areas of focus include development of stakeholder collaboration matrix for Research and Development (R&D), provision of enablers for commercialization of research breakthrough and facilitation of acceptance and utilization of products of research by end users.

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