Shell, NNPC sign agreement with Nigerian banks on contractor financing support

21 Nov 2016
Financial Nigeria

Summary

Shell said the Fund provides support for contractors to enable them finance projects executed for Shell Companies in Nigeria.

Maikanti Kacalla Baru, Group Managing Director, Nigerian National Petroleum Corporation

Shell Companies in Nigeria and the Nigerian National Petroleum Corporation have signed several Memorandums of Understanding (MoUs) with eight Nigerian banks to finance the Shell Contractors’ Support Fund, which aims to improve access to finance for Nigerian vendors and suppliers.

Under the terms of the MoUs signed in Lagos this month, Shell said the eight banks agreed to set aside $2.2 billion for the Fund. The banks are Access Bank, Skye Bank, Zenith Bank, Stanbic IBTC Bank, First Bank of Nigeria, Standard Chartered Bank, First City Monument Bank and Guaranty Trust Bank.

“Supporting SMEs under this scheme is for the mutual benefit all the parties,” said Osagie Okunbor, Managing Director of Shell Petroleum Development Company of Nigeria (SPDC) and Country Chair of Shell Companies in Nigeria. “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.”

Shell said the Fund provides support for contractors to enable them finance projects executed for Shell Companies in Nigeria in line with the aspirations of the Nigerian Content Act. To access these funds, contractors must have a valid purchase order and meet the banks’ risk assessment criteria.

According to Shell, the contractor funding scheme began in 2011 with the Shell Kobo Fund, which was eventually merged to create the Shell Contractor Support Fund in 2012. Six participating banks have so far disbursed up to $1 billion to over 220 vendors under the contractor funding scheme, Shell said. In 2015, the oil and gas giant said 93 percent of all contracts awarded by Shell Companies in Nigeria were undertaken by Nigerian companies at total value of about $900 million.


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