As part of its efforts to ensure that its registered contractors and vendors have access to bank loans at very competitive terms and rates, the Nigeria Liquefied Natural Gas Limited (NLNG) Limited has launched a $1 billion local vendors financing scheme.
The company has also signed a Memorandum of Understanding (MoU) with five participating banks – Access Bank, First Bank of Nigeria, Standard Chartered Bank, United Bank for Africa and Zenith Bank to kick off the scheme.
Under the scheme, registered NLNG contractors can approach any of the banks and apply for the loans by presenting a work order, purchase order or contract document from the NLNG.
Speaking during the signing of the MoU, the Managing Director of NLNG Limited, Mr. Babs Omotowa, said the financing scheme, which was a demonstration of the company’s commitment to the Nigerian Content, was also in line with the company’s vision of helping to build a better Nigeria.
NLNG’s General Manager, External Relations, Mr. Kudo Eresia-Eke quoted Omotowa as also saying in a statement yesterday that the scheme would alleviate funding challenges, reduce operating cost, improve project delivery timeline and drive the growth of Nigerian vendors.
According to Omotowa, who was represented by NLNG’s General Manager for Finance, Mr. Solomon Folaranmi, the funding assistance would also improve the entrepreneurship landscape in the country.
“This is just a step, and in the right direction. The success of any local contractor is linked to larger and smaller businesses around it in the value chain. We need to further develop initiatives as an enabler or platform to develop the value chain and maximize the opportunities of the future, especially with huge projects in sight such as the federal government’s Gas Master Plan initiative and Train 7,” Omotowa said.
“NLNG recognises the many challenges limiting the sustainable growth and development of local content in Nigeria, a key one being lack of access to adequate funds. A significant number of willing contractors struggle to get financing. Banks in Nigeria often find it challenging acceding to loan applications from local contractors with little or doubtful assurances of repayment. An enterprise may have little track record, credit history or illiquid collateral and thus risks are therefore perceived to be high and this makes it more difficult for local contractors to find finance,” he added.
On NLNG’s record in the development of Nigerian Content, Omotowa said NLNG had “deliberately grown local, regional, and national contractor base. NLNG’s local content has helped in the development of indigenous companies in such areas as engineering, manufacturing, fabrication, craft and skill acquisition.”
In his remarks, the General Manger, Finance, represented by NLNG’s Finance Controller, Frederick Asasa, however, said the scheme was not intended to distribute free money to NLNG contractors.
He said the facilities were neither grants nor awards, adding that NLNG and the participating banks had developed a comprehensive strategy to ensure effective monitoring of the scheme.
NLNG has recorded milestone achievements in the development of Nigerian Content in the areas of manufacturing, fabrication, shipping, training and skills development and transfer of technical knowledge to indigenous companies.
The company is owned by four shareholders, namely, the Federal Government of Nigeria, represented by the Nigerian National Petroleum Corporation, NNPC (49 per cent), Shell Gas BV, SGBV, (25.6 per cent), Total LNG Nigeria Limited (15 per cent), and Eni International (N.A,) N. V. S. a. r. l (10.4 per cent).
