CBN permits international oil firms to sell 50% of proceeds

• Published On: 01 June 2024 at 21:37

The Central Bank of Nigeria stated on Friday that international oil corporations can sell their remaining 50% of repatriated export revenues in the Nigerian Foreign Exchange Market.

This judgment comes after the CBN restricted the transfer of oil export profits by IOCs to offshore parent company accounts on February 14.

The central bank acknowledged that these transfers harmed local foreign exchange market liquidity and sought to reverse the trend through ongoing reforms.

According to a circular signed by W.J. Kanya, Director of Trade and Exchange Department, banks are only permitted to transfer 50% of repatriated export revenues to IOCs' offshore parent company accounts, with the remaining 50% repatriated after 90 days.

However, on May 6, the CBN revised this rule, allowing IOCs to repatriate 50% of their export revenues immediately or as needed, with the remaining 50% utilized to fulfill financial obligations in Nigeria.

This measure tries to strike a compromise between IOCs' interests and the necessity to preserve liquidity in the domestic foreign exchange market.

By permitting IOCs to sell their retained proceeds on the Nigerian market, the CBN hopes to increase liquidity and stimulate economic growth. However, in a new development, CBN stated that 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".

The apex bank clarified that 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," the central bank noted.

Some of the CBN's financial commitments include the amount for cash calls, domestic loan principle and interest payments, transaction taxes (including the Nigerian Content Development Levy), and education tax.