The Central Bank of Nigeria has said that international oil companies can sell their retained 50 per cent earnings of repatriated export proceeds in the Nigerian Foreign Exchange Market.
This decision was made in response to the CBN’s February 14 restriction on IOCs’ ability to transfer crude export earnings to offshore parent company accounts, according to The Punch.
The apex bank acknowledged that these transfers had an impact on the liquidity of the domestic foreign exchange market and worked to buck the trend with continuing reforms.
According to a circular signed by the Director of Trade and Exchange Department, W.J. Kanya, banks can only transfer 50 per cent of repatriated export proceeds to IOCs’ offshore parent company accounts, with the remaining 50 per cent repatriated after 90 days.
However, following a review of this directive by the CBN on May 6, IOCs were now permitted to repatriate half of their export proceeds—50 percent of which can be utilized to fulfill financial obligations in Nigeria—either immediately or as needed.
With this action, the demands of IOCs and the requirement to preserve liquidity in the local foreign exchange market are intended to be balanced.
By allowing IOCs to sell their retained proceeds in the Nigerian market, the CBN seeks to boost liquidity and promote economic growth.
However, in a new development, CBN said following the release of the circular “dated May 06, 2024, referenced TED/FEM/PUB/FPC/001/008, in respect of Cash Pooling by banks on behalf of IOCs, we received several requests for clarification on item No 3(8) on forex sales at the Nigeria Foreign Exchange Market”.
Providing more clarifications, the apex bank said the “50% balance of the repatriated export proceeds may be sold to Authorized Dealers or eligible users of foreign exchange with eligible transactions”.
“If the IOC does not have any financial obligation to settle with the funds during or after the 90-day retention period, the 50% balance may also be sold wholly as stated in (1) above,” CBN said.
