BP launched the first step in an important new initiative, which will give greater access to finance to Azerbaijan's local oil and gas industry supplier and service enterprises,Trend reports with reference to the release by BP Azerbaijan.
AzMETCO a local Joint-Stock Company of Complex Adjustment and Automation, becomes the first enterprise to receive a loan under a new Supply Chain Finance Facility pilot project set up by BP, on behalf of its project partners, and the International Finance Corporation (IFC).
The Supply Chain Finance Facility (SFF) is a joint credit facility aimed at supporting development of Azerbaijans local oil and gas industry supplier and service enterprises through resources provided by BP and its partners, the IFC and a local financial institution selected by the IFC.
The project is in line with BPs and its partners target to double their total spend with locally-owned companies by 2010 raising it to over $500 million a year. The SFF is designed to be implemented in several phases. The first phase of the credit component of the project has already been launched as a pilot program and will be managed by the IFC.
This pilot project is implemented through a separate IFC grant agreement with the Micro-Finance Bank of Azerbaijan (MFBA) and a total loan capital of $316,000. This will provide loans for up to three selected local suppliers of BP and its partners in Azerbaijan. Under this agreement, BP on behalf of its partners will provide $140,000, the IFC $140,000 (of which $20,000 is for technical development and appraisal of this pilot phase) and the remaining $56,000 will be invested by MFBA.
Local companies eligible to receive SFF loans will be selected for competitive pre-qualification exercises by the Enterprise Centre, then will pass through the MFBA credit appraisal and will finally be approved by the SFF Credit Committee comprising representatives of all the three parties involved.
By 2010 BP and its partners aim to spend an additional $250million annually with small and medium-sized enterprises (SMEs) and joint ventures, bringing the total spend with locally-owned companies to over $500 million a year.