CBN Grants Approval For International Oil Firms To Sell 50% Of Revenue

CBN Grants Approval For International Oil Firms To Sell 50% Of Revenue

The Central Bank of Nigeria (CBN) has announced a significant policy adjustment, permitting international oil companies (IOCs) to vend 50% of their retained export proceeds in the Nigerian Foreign Exchange Market………..CONTINUE READING

This decision follows earlier restrictions imposed on the transfer of crude export proceeds by IOCs to offshore parent company accounts on February 14, which had a notable impact on domestic foreign exchange market liquidity. The CBN aims to counteract this effect through ongoing reforms.

In a circular issued by the Director of Trade and Exchange Department, W.J. Kanya, it was outlined that banks could only transfer half of repatriated export proceeds to IOCs’ offshore parent company accounts, with the remaining 50% repatriated after a 90-day period.

However, a review conducted by the CBN on May 6 introduced a modification to this directive. It now allows IOCs to repatriate 50% of their export proceeds immediately or as necessary, while the remaining 50% can be utilized to settle financial obligations within Nigeria.

This adjustment seeks to strike a balance between the requirements of IOCs and the imperative of maintaining liquidity in the domestic foreign exchange market, thereby promoting economic growth.

In response to inquiries and requests for clarification regarding the circular dated May 06, 2024, the CBN has elaborated on the provision concerning forex sales at the Nigeria Foreign Exchange Market.

According to the apex bank, the 50% balance of repatriated export proceeds may be sold to Authorized Dealers or eligible users of foreign exchange with qualifying transactions. Additionally, if IOCs do not have any outstanding financial obligations to settle with the funds during or after the 90-day retention period, the entire 50% balance may be sold as specified.

The financial obligations outlined by the CBN include balances for cash calls, domestic loan principal and interest payments, transaction taxes (including the Nigerian Content Development Levy), and education tax

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