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How to Access the CBN N50 Million Intervention Fund for Small & Medium Enterprises (SMEs) and Retail Distributors of CNG and LPG

Compressed Natural Gas (CNG) is a clean, odorless, non-corrosive gas that can be used as a cheaper, safer and more effective alternative to the conventional fuels used in automobiles. In the recent times, CNG is increasingly being recognized as one of the most viable choices available for alternative fuels. Being a much cleaner source of fuel, it has become very popular as a transport fuel because of its improved portability and reduced cost. Currently, the use of CNG for public transport is growing. Cities such as New Delhi, for example, have made the use of CNG in public transport very compulsory, resulting in a major reduction in emissions. In the past, the deployment of CNG in small vehicles was not common due to its heavy and bulky tank requirements.
LPG is a low carbon, renewable combustion fuel that releases virtually no black carbon and does not spill. Its use increases the quality of air, lowers GHG emissions and protects the environment. It is used for transport, commercial sector, industry, agriculture, heating and cooking at home, and for recreational purposes. Today, LPG can be available to anyone anywhere without significant investment in infrastructure. There is nothing that needs to be invented and enough funds exist to last for several decades.
The central bank of Nigeria recognizes the significant of using the Compressed Natural Gas (CNG) and the Liquefied Petroleum Gas (LPG) as clean alternative sources of domestic energy in Nigeria. To this effect the apex bank introduced the National Gas Expansion Programme (NGEP) to make CNG the fuel of choice for transportation and LPG as Confidential fuel of choice for domestic cooking, captive power and small industrial complexes. In the same vein for the gas-based industries, most especially the petrochemical are to be enabled to support large industries, such as agriculture, industrial applications, and textile.
In order to stimulate the productive role of the small-scale operators and retail distributors in the gas value chain, the CBN introduces N50 Million Intervention Fund for Small & Medium Enterprises (SMEs) and Retail Distributors of CNG and LPG. The CBN embarks on this so as to improve access to finance for private sector investments in the domestic gas value chain. The CBN also aims to fast-track the adoption of CNG as the fuel of choice for transportation and power generation, as well as LPG as the fuel of choice for domestic cooking, transportation and captive power. It is also part of its objective to leverage for additional private sector investments in the domestic gas market and to provide and boost employment opportunities throughout the federation.
The Significance of the CBN N50 Million Intervention Fund
In its outline, the CBN stated that the Small & Medium Enterprises (SMEs) and Retail Distributors will have access to the N50 Million Intervention fund if they engage in the sales and establishment of the CNG and LPG, domestic cylinder injection and exchange; auto gas transportation systems, conversion and distribution infrastructure. The manufacturers of LPG retail skid tanks and refilling equipment are also eligible to access the fund as opined by the CBN. The apex bank further stated that Small and medium-scale enterprises (SMEs) and retail distributors shall be funded through NIRSAL Microfinance Bank (NMFB) under AgSMEIS with a maximum term loan of N50 Million and working capital of N5 million per obligor.
 It was further confirmed that the interest rate under the intervention shall be at not more than 5.0% p.a. (all inclusive) up to 28th February 2021, thereafter, interest on the facility shall revert to 9% p.a. (all inclusive) effective from 1st March 2021. However, CBN said that Term loans shall have a maximum tenor of 5 years not exceeding 31st December, 2030; Term loans shall be allowed a maximum of two years moratorium on principal repayment only and that Working capital facility of one (1) year with a maximum roll over of not more than twice and subject to prior approval.
The CBN also makes provision for the loan repayment where monthly interests on the facility shall be paid after the moratorium period through the NIRSAL Microfinance Bank (NMFB) under AgSMEIS. CBN also affirmed that SMEs shall approach NMFB with bankable proposals while NMFB would carry out due diligence on applications based on business and credit considerations. Those applications that meet disbursement criteria would be forwarded to CBN for review and release of funds to NMFB, then upon approval, the CBN would release the approved sum to NMFB for disbursement to the obligor according to the disbursement schedule not later than 5 working days after receipt of funds from the CBN.
The CBN also set out the collateral requirements which could only be accepted as determined by the NMFB. CBN also said that a periodic monitoring of projects would be carried out jointly by the PB, MPR and CBN while The Development Finance Department of the Central Bank of Nigeria would manage the credit intervention. The apex bank further opined that the the effective implementation of the intervention facility and the responsibilities of the stakeholders include provision of funding for the intervention facility by the CBN, while the participating banks would appraise and approve requests under the Facility based on normal business consideration and due diligence, the Ministry of Petroleum Resources (MPR) will receive and endorse project proposals for financing under the intervention and the beneficiaries would adhere strictly to the terms and conditions of the Facility. CBN also opined that whenever a loan is repaid or the facility is otherwise discontinued, the PB shall return the fund to the CBN within 3 working days, providing details of the credit facility while sanctions on infractions shall be applicable as determined by the CBN.
While the federal government through the central bank of Nigeria is striving to stimulate the growth of economy by providing fund to the productive sectors of the economy, oil and gas inclusively, it is of paramount important for the Small & Medium Enterprises (SMEs) and Retail Distributors of CNG and LPG to take this advantage. This will boost economic performance in the oil and gas sector since it also attracts lower interest rate and repayment is spread across a long-term period. Effective and efficient use of this fund will increase the consumption of clean energy without creating much pollution in the environment. The Small & Medium Enterprises (SMEs) and Retail Distributors of CNG and LPG are therefore implored to increase their productive capacity of CNG and LPG as accessing N50 Million Intervention Fund has been conveniently outlined.
The framework for accessing the fund is accessible here
KiakiaGas Limited is a leading Gas business in Lagos,Nigeria with expertise in LPG retailing, New Gas Market development, Building of Gas Plants and Gas strategy advisory. If you need a partner with a global perspective and local expertise in the Nigerian and African space, kindly book for a free session with our team of experts to help you or write us an email at or Whatsapp: +2348085269328


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