Adedapo Adesanya
By Adedapo Adesanya
The Central Bank of Nigeria (CBN) has stopped international oil companies (IOCs) operating in Nigeria from immediately remitting 100 per cent of their forex proceeds to their parent companies abroad.
According to the new guidelines, IOCs will now be allowed to repatriate only 50 per cent of their proceeds abroad immediately while the other 50 per cent will be repatriated 90 days from the day of inflow.
This means IOCs like TotalEnergies, Shell, and Eni, among others will only be able to remit half of their FX earnings to their books instantly, and the other half after the three-month window.
This was disclosed in a circular signed by the apex bank’s Director of Trade and Exchange, Mr Hassan Mahmud, where it stated that the practice known as “cash polling” has an impact on liquidity in the domestic forex market.
“The central bank has observed that proceeds of crude oil exports by International Oil Companies (IOCs) operating in Nigeria are transferred offshore to fund parent accounts of the IOCs (otherwise referred to as cash polling). This has an impact on liquidity in the domestic foreign exchange market”
“In line with the ongoing reforms in the foreign exchange market, it has become necessary to take measures to address this trend. Consequently, the CBN hereby directs as follows;
“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 50% may be repatriated after 90 days from the date of inflow of export proceeds,” the statement reads.
This is the latest effort by the CBN to keep Dollars in the Nigerian system as shortfalls in supply are causing the local currency to face a worsening outcome. Earlier, it hit a low of N1,600 on the black market.
“The CBN remains committed to promoting transparency in the Nigerian Foreign Exchange Market and will continue to develop policies to stabilise and further deepen the market,” it added.
