The Central Bank of Nigeria (CBN) has prohibited International Oil Companies (IOCs) from repatriating all their foreign exchange earnings to their parent companies abroad.
Commencing immediately, the policy restricts foreign oil firms from repatriating 50 percent of their proceeds in the first instance and the other half after 90 days.
IOCs must have easy access to their export proceeds to fulfill their offshore obligations, as stated in the circular signed by the Apex Bank’s Director of Trade and Exchange, Hassan Mahmud.
The CBN, however, said it supports this requirement, as long as it has the least possible detrimental effect on the liquidity of the Nigerian foreign exchange market.
“The Central Bank has observed that proceeds of crude oil exports by International Oil Companies (IOCs) operating in Nigeria are transferred offshore to fund parent accounts of the IOCs (otherwise referred to as cash polling). This has an impact on liquidity in the domestic foreign exchange market,” the circular stated.
It added that in line with the ongoing reforms in the foreign exchange market, it has become necessary to take measures to address this trend.
Consequently, the CBN hereby directs as follows; “Banks are allowed to pool cash on behalf of IOCS, subject to a maximum of 50% of the repatriated export proceeds in the first instance. The Balance 50% may be repatriated after 90 days from the date of inflow of export proceeds.”
The Nation
