Shell and World Bank plan financial lifeline for Niger Delta contractors

Local contractors in the oil-rich Niger Delta may soon receive a whopping lifeline of N3 bn ($ 30 mm). The amount will be a boost to the financial base and employment opportunities of the indigenous contractors.
The revolving credit facility will come from the Anglo-Dutch oil firm, Shell Petroleum Development Company and World Bank's private finance subsidiary, International Finance Corporation (IFC). By a competitive bidding, a local bank which will manage the fund will soon be selected.
A statement by Shell's Corporate External Relations Manager, Mr. Precious Omuku said: "The facility, which will primarily be for the provision of capital financing to small and medium sized indigenous contractors, was approved by the Board of Directors of IFC on June 19, 2001." According to him, the project is structured as a revolving $ 30 mm credit facility and will also involve a partnership with a Nigerian bank.

Under the agreement, each of the three participating bodies -- Shell, IFC and the would-be local bank will make a $ 10 mm contribution to the funding of the project. "The bank will administer the provision of medium terms loans, to qualifying indigenous contractors providing services to Shell Petroleum Development Company of Nigeria (SPDC) in the Niger Delta," Omuku said.
He explained that the loans would be repaid through proceeds of contracts to Shell in the Niger Delta, adding that the commercial risk would be shared equally by the three participants. Shell's $ 10 mm contribution, Omuku stated, would be provided by an overseas company which is wholly owned by Shell.
"The loan facility will target small and medium -- scale entrepreneurs either locally owned or employing indigenous Delta people engaged in services such as mechanical and petroleum engineering and design, software development, pipeline maintenance and environmental work," he stated.
Omuku noted that in addition to the loan facility, Shell and IFC were supporting a parallel capacity -- building programme that would be designed to provide technical assistance to local contractors. "Over time, it is envisaged that the benefit of these initiatives will be seen in a stronger base of local contractors able to compete more effectively in the provision of a wider range of higher value services and positioned to generate higher returns to the local economy," he stated.

Shell Deputy Managing Director, Mr. Egbert Imomoh expressed satisfaction with the agreement and the promise it held for the development of the Niger Delta. "It is gratifying to see the co-operation between Shell and IFC turn out in this big way at a time when the contribution of all stakeholders is required for the sustainable development of the Niger Delta", Imomoh said.
According to him, the support for indigenous entrepreneurs in the oil and gas sector had multiple advantages of capacity building, wealth creation and employment generation, which are consistent with national aspirations. He added that the agreement clearly demonstrated Shell's continuing commitment to the development of the country.
Also, Shell's Finance Director Mr. Guy Cowan said, "Our participation in this all-important facility is in line with our continuing efforts to encourage indigenous contractors not only for their growth but to enhance their contribution to the development of the Niger Delta."

Shell, the operator of the NNPC/Shell/Elf/Agip Joint Venture is the largest oil-producing company with more than 75 % of its operation onshore.