CBN Relaxes Restriction On Repatriation Of FX Proceeds By Oil Firms

The Central Bank of Nigeria (CBN) has relaxed its initial restriction on the repatriation of forex proceeds by international oil firms operating in the country.

In a circular dated May 6, 2024 signed by the Director, Trade and Exchange Department, Hassan Mahmud, the apex bank said oil firms can now spend 50% balance of the repatriated export proceeds on financial obligations.

In February, the apex bank stopped international oil companies from repatriating 100% foreign exchange proceeds to their mother companies overseas at once.

The apex bank had said international oil firms could repatriate 50% of their proceeds in the first instance and then the other half after 90 days.

However, in its new directive, the CBN said, “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 apex bank said.

“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 CBN said petroleum profit tax, royalty, domestic contractor invoices, cash call, domestic loan principal and interest payment, transation taxes, education tax and forex sales at the Nigerian Foreign Exchange Market are eligible for settlement from the balance 50%.