The policy comes amid Nigeria’s forex crisis which has led to dollar shortages and have pushed the Naira to record lows.
The Central Bank of Nigeria (CBN) has put a restriction on the amount of forex proceeds international oil companies (IOCs) can repatriate from Nigeria to their mother companies overseas.
The apex bank in its bid to monitor the country’s forex market and also, boost dollar liquidity in the domestic market also directed IOCs operating in the country to fund their offshore accounts in two phases as the former repatriation policy impacted liquidity in the domestic foreign exchange market.
According to the circular issued by the apex bank and signed by the Director of Trade and Exchange Department, Hassan Mahmud, IOCs have been directed to repatriate 50% of their proceeds in the first instance and then the other half after 90 days.
The CBN said it observed that proceeds of crude oil exports by IOCs operating in Nigeria are transferred offshore to fund parent accounts of the IOCs in a phenomenon described as “cash pooling”.
The apex bank noted it was in support of IOCs having easy access to their funds in order to meet their offshore obligations but added that the repatriation must be made with minimal impact on the liquidity of 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,”
“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 of 50% may be repatriated after 90 days from the date of inflow of the export proceeds.” the statement noted.
The latest CBN policy comes amid Nigeria’s forex crisis which has led to dollar shortages and have pushed the Naira to record lows.
The apex bank has however, resolved to continue advancing openness in the Nigerian FX market while promising to maintain regulations to stabilise and expand the market.
