Arco Group Plc has said the Memorandum of Understanding for a $2.2bn contractor financing support recently signed with eight Nigerian banks by Shell Companies in Nigeria and its joint venture partner will boost the earnings of the benefiting firms going forward.
The amount to be managed by the banks is being set aside to provide loanable funds for Small and Medium-sized Enterprises to enable them to finance projects being executed for Shell Companies in Nigeria.
The firm, at its Annual General Meeting held in Lagos, said the new financing scheme was an improvement on the existing method of loan disbursement to vendors working with Shell companies in the country.
The MoU setting aside the loanable fund for the SMEs is a far-reaching move by Shell and the Nigerian National Petroleum Corporation to reduce to the barest minimum obstacles to credit that indigenous firms in particular regularly face in the process of handling contracts for oil majors like Shell.
Arco stated, “In our 36 years in business, we have always advocated for policies like this to accelerate in-country capacity growth in Nigeria.
“Arco notes with satisfaction that Shell has been undertaking several initiatives in recent years in order to, on its own part, give effect and lend credence to the Nigerian Oil and Gas Content Development Act of 2010. For us in Arco, this is a very strong indication of Shell’s support for the local content law. It is an indication by Shell to genuinely develop local capability in the country.”
The Group Managing Director, Arco Group, Mr. Alfred Okoigun, described the outgoing financial year as a challenging one, and noted that the Shell support was a good way to identify with Nigeria at this critical period of recession
Okoigun said, “We expect all the oil majors in Nigeria to emulate this giant step because such a move is a win-win situation for all the stakeholders in the oil and gas sector in the country. The indigenous SMEs in the sector would have been properly empowered to deliver on the contracts awarded to them.
“The oil major will be able to make realistic forecasts on execution of its contracts. The eight banks involved will be in brisk business with minimum risks. Availability of funds for contract execution in the oil and gas industry will reduce the current financial stress being experienced in the sector. Meanwhile, more employment would have been generated and the economy should be the better for it on the long run.”