Nigeria's Central Bank restricts dollar repatriation by international oil firms to support Naira

The Central Bank of Nigeria has directed International Oil Companies operating in the country to fund their offshore accounts in two phases.

The apex bank disclosed this in a circular dated February 14, 2024, and signed by the Director, Trade and Exchange Department, Hassan Mahmud, which was issued to all authorised dealer banks.

Mahmud noted that the IOCs, while ‘cash pooling,’ affect liquidity in the domestic forex market.

The apex bank, henceforth, directed that “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.”

It added that the remaining half “may be repatriated after 90 days from the date of inflow of export proceeds.”

The circular, titled, ‘Requirements for foreign currency cash pooling on behalf of International Oil Companies (IOCs) in Nigeria,’ read, “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 apex bank noted that these shall be subject to the fulfillment of a “prior approval of the CBN for the repatriation of funds under the ‘cash pooling’ transaction, ‘cash pooling’ agreement with the parent entity of the IOCs operating in Nigeria,” among others.