The Central Bank of Nigeria (CBN) has revised its stance on the repatriation of foreign exchange proceeds by international oil companies, now permitting them to allocate 50% of their earnings for financial obligations within the country.
In a circular dated May 6, 2024, signed by Director Hassan Mahmud of the Trade and Exchange Department, the CBN outlined the updated guidelines, allowing immediate pooling of the initial 50% of repatriated proceeds.
Previously, the CBN had restricted international oil firms from repatriating 100% of their foreign exchange proceeds at once, mandating a phased approach.
However, the new directive provides flexibility, enabling oil firms to settle financial commitments in Nigeria using the remaining 50% within a 90-day period.
“Following the recent enquiries by banks and other stakeholders on our circular referenced TED/FEM/PUB/FPC/001/004, in respect of Cash Pooling requests by banks on behalf of IOCs, we provide further clarifications as follows:
“The initial 50% of the repatriated proceeds can be pooled immediately or as at when required. Banks may submit the request for cash pooling ahead of the expected date of receipt, supported by the required documentations, for approval by the Central Bank of Nigeria.
“The 50% balance of the repatriated export proceeds could be used to settle financial obligations in Nigeria, whenever required, during the prescribed 90-day period,” the apex bank stated in the new directives.
Eligible expenses for this balance include petroleum profit tax, royalties, domestic contractor invoices, cash calls, domestic loan payments, transaction taxes, education taxes, and forex sales at the Nigerian Foreign Exchange Market.
