FG Increases Local Content Fund to $200m

• FG Increases Local Content Fund to $200m

The Executive Secretary of the Nigerian Content Development and Monitoring Board (NCDMB), Mr. Simbi Wabote, Monday said the agency had obtained all necessary approvals to relaunch the Nigerian Content Intervention Fund (NCI Fund) and had increased the pool available for lending to qualified oil and gas players from $100 million to $200 million.

This, he said, was to increase the opportunities for more deserving companies to benefit from the fund.

He spoke in Lagos just as Dangote Refinery said it would select competent Nigerian vendors that would participate in the construction of its plant from the Nigerian Oil and Gas Industry Joint Qualification System (NOGICJQS), the database of available capacities in the oil and gas industry managed by the NCDMB.

The Chief Operating Officer of Dangote Refinery, Mr. Giuseppe Surace, made this commitment at a recent technical meeting held between top officials of the company and the NCDMB at the refinery project site in Lekki, Lagos State.

According to a statement Monday by the NCDMB, Surace said there were many advantages in patronising the local market, adding that Nigerian companies would get the first right of refusal.

“We will procure anything that is available in Nigeria,” Surace said. He added that there were several Nigerian Content opportunities in the company’s refinery and gas gathering projects, stressing that interested companies must submit competitive bids and have technical capabilities.

He explained that the project was a private investment, hence the strategy to get the best quality anywhere in the world at the most competitive price.

Surace urged local vendors to quote reasonable prices when bidding for industry projects, rather than believe that they would win jobs because of the Nigerian Content Act, irrespective of the cost in their quotations.

He noted that the Dangote Group engaged the services of some Nigerian companies on its fertiliser project, which had reached an advanced stage of development and was committed to do the same on the 650,000 barrels per day refinery project, which would be completed in October 2019.

In his comments, Wabote promised that the agency would assist the company in the utilisation of the NOGICJQS database to ensure that it maximises the utilisation of local personnel, goods and services in the construction and operations phase of the project.

“The Nigerian Content Act applies to every player in the Nigerian oil and gas industry and not just international companies. If Nigerian companies and investors procure everything from abroad then the essence of the Act will be defeated,” Wabote said.

Wabote maintained that slight cost differentials between Nigerian and foreign vendors should not be an excuse to export jobs, stressing that the opportunity cost of creating employment for Nigerians, developing local capacity, retaining spending in the economy and engendering a safe operating environment for companies justifies any marginal cost of execution charged by Nigerian vendors.

He explained that Nigerian companies were affected by the high costs of funds and powering their operations with diesel generators, assuring them however that investments and initiatives by the federal government was already improving the power situation in the country.

He disclosed that the board had obtained all necessary approval to relaunch the Nigerian Content Intervention Fund (NCI Fund), adding that the pool available for lending to qualified oil and gas players had been increased from $100 million to $200 million to ensure that more deserving companies benefit at the same time.

He reiterated that NCI Fund would be disbursed directly by the Bank of Industry (BOI) at eight per cent interest rate and repaid within five years.

Meanwhile, oil prices fell Monday by nearly two per cent, pulling back from last week’s rally built on signs the global market is starting to rebalance from chronic oversupply.

Global benchmark, Brent crude futures lost two per cent, or $1.07, at $51.65 per barrel after surging more than three per cent on Friday.

US West Texas Intermediate crude futures fell 1.9 per cent, or 90 cents, to $47.63 per barrel. The contract had also risen three per cent in the previous session.

Reuters reported US hedge funds and money managers have already started reducing bets on rising prices, with Commodity Futures Trading Commission data showing on Friday that investors had cut bullish bets on U.S. crude for a second straight week.

Investors in Europe disagree on the outlook, however, as data from the InterContinental Exchange showed speculators raised bullish Brent crude bets last week.

The world remains awash with oil despite a deal struck by some of the world’s biggest producers to rein in output.

Rising US production has been a major factor keeping supply and demand from balancing.

There are indications that US output may soon slow, as energy companies cut rigs drilling for new oil for a second week in three, energy services firm Baker Hughes said on Friday.

Drillers cut five rigs in the week to August 18, decreasing the count to 763.

US commercial crude inventories have fallen almost 13 per cent from their March peaks to 466.5 million barrels.

The oil minister of Kuwait, which is participating in OPEC-led production cuts, said U.S. crude stocks were falling more than expected because output cuts were taking effect.

Azerbaijan, not an OPEC member but one of the countries which has committed to the production curbing deal, remains committed to cutting output, the head of state oil company SOCAR told Reuters yesterday.

A shutdown of Libya’s Sharara field due to a pipeline blockage provided some upside. Libya’s National Oil Corp declared force majeure on loadings of Sharara crude from the Zawiya oil terminal on Sunday.