CBN relaxes restriction on repatriation of export proceeds by IOCs

The Central Bank of Nigeria (CBN) has reviewed its directive on the repatriation of export proceeds by international oil companies (IOCs).

In a circular on May 6, CBN said IOCs can repatriate 50 percent of their export proceeds immediately or when required, while the remaining 50 percent can be used to settle financial obligations in Nigeria.

The circular was signed by Hassan Mahmud, director, trade and exchange department.

On February 15, the apex bank placed a limit on transfer of proceeds from crude exports by IOCs to offshore parent company accounts.

CBN said the transfer of funds by the IOCs has an impact on liquidity in the domestic foreign exchange market.

The financial regulator directed banks to only transfer 50 percent of repatriated export proceeds, on behalf of the IOCs, to their parent company offshore accounts — with the remaining 50 percent repatriated after 90 days.

However, CBN has clarified that within the 90-day period, IOCs can use the balance to settle financial obligations such as petroleum profit tax, royalty and domestic contractor invoices.

“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.”

CBN said the IOCs can also utilise the balance for cash calls, domestic loan principal and interest payments, transaction taxes (including Nigerian Content Development NCD) Levy), education tax, and forex sale at the Nigerian Foreign Exchange Market.