International Oil Companies (IOCs) will be unable to repatriate all proceeds from crude oil exports at a time as the Central Bank of Nigeria has ordered banks to hold 50 per cent of sales proceeds for a minimum of 90 days....CONTINUE READING
The CBN gave the order in a circular to banks dated February 14, 2024, titled, ‘Requirements for Foreign Currency Cash Pool on Behalf of International Oil Companies (IOCs) In Nigeria.’
The apex bank said it has observed that proceeds of crude oil exports by IOCs operating in Nigeria are transferred offshore to fund parent accounts of the IOCs.
The CBN said, “This has an impact on liquidity in the domestic foreign exchange market.
“While the CBN strongly supports the need for IOCs to have easy access to their export proceeds, particularly to meet their offshore obligations, this must be done with minimal negative impact on liquidity in the Nigerian foreign exchange market.”
Consequently, the apex bank said it has become imperative for the regulator to address the impact of their actions.
The CBN said, “Banks are allowed to pool cash on behalf of IOCs, subject to a maximum of 50 per cent of the repatriated export proceeds in the first instance.
“The balance of 50 per cent may be repatriated after 90 days from the date of inflow of the export proceeds. The above shall be subject to the fulfilment of the following documentation requirements: Prior approval of the CBN for the repatriation of funds under the ‘Cash Pooling’ transaction
“Cash Pooling agreement with the parent entity of the I0Cs operating in Nigeria. Statement of expenditure incurred by the IOC in the immediate past period relating to the ‘Cash Pooling.’
Evidence of the source of foreign exchange inflows. Completion of relevant Forex Form(s) as required under extant regulations.”
