CBN Imposes Limits On Foreign Firms’ FX Revenue Repatriation

CBN Imposes Limits On Foreign Firms’ FX Revenue Repatriation

In a seismic shift, the Central Bank of Nigeria (CBN) enforces a groundbreaking policy, curtailing the ability of International Oil Companies (IOCs) to repatriate 100% of their foreign exchange earnings to their overseas parent companies…..READ ALSO Breaking News: CBN Bans Cash For Travel Allowances

Effective immediately, the new directive mandates that foreign oil firms can only repatriate 50% of their proceeds initially, with the remaining half accessible after a 90-day period.

Signed by Hassan Mahmud, Director of Trade and Exchange at the CBN, the circular underlines the importance of ensuring that IOCs have adequate access to their export proceeds to meet offshore obligations.

While acknowledging the critical role of foreign oil firms, the apex bank underscores its commitment to maintaining liquidity in the Nigerian forex market, emphasizing that the policy will be upheld as long as it minimizes adverse effects on liquidity.

The circular highlights the CBN’s observation that the practice of offshore transfer of crude oil export proceeds, commonly known as cash pooling, significantly impacts liquidity in the domestic forex market.

Under this new regime, banks are permitted to pool cash on behalf of IOCs, with a cap set at 50% of repatriated export proceeds initially, with the remaining 50% accessible after a 90-day period from the date of inflow.

This bold move by the CBN signals a strategic shift in managing forex liquidity while balancing the needs of foreign oil firms with the broader economic interests of Nigeria.