The Shell Petroleum Development Company of Nigeria Limited (SPDC) has said access to funds is a major challenge to local contractors that work for the oil giant and the establishment of the contractor support fund is to address that problem.
In statement, the SPDC spokesman, Bamidele Odugbesan, noted that the memorandum of understanding (MoU), signed by SPDC and the United Bank for Africa (UBA) in Abuja, is a testament to the commitment of Shell to helping indigeneous firms offering services to deliver.
The $200 million contractor support fund will boost the financial capacity of SPDC’s vendors and suppliers. SPDC’s Director and General Manager, Government and Business Relations, Bashir Bello, who signed the MoU with the United Bank for Africa (UBA), described the initiative as a product of the effort by SPDC and its joint venture partners, including NNPC, Total and Agip to enhance local content and local participation in the oil and gas value chain.
The fund provides support for contractors to finance projects executed for Shell companies in line with the aspirations of the Nigerian Content Act. To access the fund, the contractors must have a purchase order and meet the bank’s risk assessment criteria. Lack of access to capital hinders many firms from competing for and executing contracts effectively,” said Bello, who signed for SPDC.
“This funding will enable us to achieve our community content ambition of increasing participation of host communities in the SPDC value chain,” he added.
The General Manager Energy Bank of UBA, Ebele Ogbue, said the bank was committed to providing support to firms through its partnership with SPDC JV. Ogbue, who signed for UBA, commended the national and community content efforts of Shell firms, noting that UBA was ready to provide the needed financial backing that would empower firms to play more active role in the country’s energy sector.
The Shell 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 economic exigencies and to align it with stakeholder needs by merging the two initial initiatives.
In 2016, Shell signed a $2.2 billion MoU with seven banks that have since then disbursed around $1.5 billion loans to about 372 small- and medium-sized Nigerian suppliers and vendors in the oil and gas industry.