Leading oil and gas company, Shell Petroleum Development Company of Nigeria Limited (SPDC) on Friday 22 March signed a contractor support fund of $200 million with the United Bank for Africa (UBA). Under the partnership agreement, the bank will provide loan facilities to the oil company’s local vendors and suppliers.
This partnership comes in response to the challenges faced by contractors in the oil industry in Nigeria. Thus, contractors and suppliers who have valid purchase order and meet the bank’s risk assessment criteria will have access to the fund. Potentially, this support fund will boost their financial capacity and enable them to improve their operations. According to the company, “findings indicate that lack of access to capital hinders many Nigerian companies from competing for and executing contracts effectively.” To this effect, the company aims to increase participation of host communities in its value chain through the funding.
The agreement was signed in Abuja with SPDC’s General Manager of Government and Business Relations, Mr. Bashir Bello and the General Manager, Energy Bank of UBA, Ebele Ogbue representing each company respectively.
Shell’s contractor support fund provides support for contractors to finance projects for Shell companies in Nigeria in line with the aspirations of the Nigerian Content Act. Shell had previously signed a $2.2 billion MoU with seven Nigerian lenders in 2016 which has, till date, helped provide local vendors financial support. According to the company, about $1.5 billion worth of loans have since been given to over 300 small and medium sized businesses who either supply to Shell Nigeria or serve as vendors to the company’s products. With this latest deal, the company’s contractor support fund has risen to $2.4 billion.
Shell companies started their intervention in 2011 with the Sell Kobo Fund which gave rise to the Shell Contractor Support Fund the following year. Over the years, the scheme has been reviewed to serve economic demands and to align with stakeholder needs by addressing market realities.