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The Central Bank of Nigeria (CBN) has implemented new measures affecting international oil companies (IOCs), restricting them from repatriating 100% of their foreign exchange proceeds at once.
In a recent circular signed by Dr. Hassan Mahmud, the Director of the Trade and Exchange department at the CBN, it was stipulated that only 50% of forex proceeds could be repatriated immediately, with the remaining 50% allowed after a 90-day waiting period from the date of inflow.
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This practice, known as “cash polling,” where IOCs transfer proceeds of crude oil exports offshore to fund parent accounts, has been identified as having an impact on liquidity in the domestic forex market.
The CBN, while recognizing the need for IOCs to access their export proceeds, aims to balance this with minimizing the negative impact on Nigeria’s forex market liquidity.
Under the new guidelines, banks are permitted to pool cash on behalf of IOCs, up to a maximum of 50% of the repatriated export proceeds initially. The remaining 50% can be repatriated after 90 days from the date of inflow of export proceeds.
The CBN emphasized the importance of obtaining approval from the Central Bank of Nigeria before the repatriation of funds under the cash polling framework. It also introduced rules for “cash polling,” requiring the parent entity of IOCs to reach an agreement with the CBN before implementing such measures.
Additionally, IOCs are required to submit statements of expenditure incurred in the period before the cash polling, evidence of the source of foreign exchange inflow, and completion of relevant forex forms as per existing regulations.
