Central Bank gives oil firms green light for full foreign exchange remittance

The Central Bank of Nigeria has given International Oil Companies the green light to repatriate their export proceeds in full, enabling them to access 100 per cent of their foreign exchange earnings through authorised dealer banks.

n

This decision was outlined in a circular published on the bank's website on Wednesday, which was issued by the Trade and Exchange Department and signed by its Director, Dr Musa Nakorji.

n

The move is part of the bank's ongoing efforts to boost liquidity and stability in the foreign exchange market, and marks a significant shift from its earlier policy introduced in 2024.

n

Under the previous policy, authorised dealer banks were allowed to pool 50 per cent of repatriated export proceeds on behalf of oil firms, with the balance held for 90 days before repatriation.

n

The bank had introduced this policy in 2024, as part of reforms aimed at creating more liquidity and stability in the Nigerian Foreign Exchange Market, with two circulars allowing Authorised Dealer Banks to cash pool 50 per cent of repatriated export proceeds on behalf of International Oil Companies.

n

However, the latest adjustment is intended to further liberalise the market, with the bank noting that it aims to deepen the market in line with current market realities.

n

The circular states that International Oil Companies are now granted unfettered access to their repatriated export proceeds, and may repatriate 100 per cent of their export proceeds through authorised dealer banks.

n

Authorised dealer banks are required to ensure adequate documentation and submit a monthly report to the Director, Trade & Exchange Department, as part of the new framework.

n

The Central Bank of Nigeria has made it clear that the new directive overrides all previous guidelines on cash pooling arrangements for oil companies, with the provision superseding all other circulars issued by the Bank on Cash Pooling.

n

The bank has directed all authorised dealer banks to comply with the new framework immediately, with the directive taking effect right away.

n

In 2024, the Central Bank of Nigeria introduced measures affecting international oil companies operating in Nigeria, which limited their ability to immediately remit 100 per cent of forex proceeds to their parent companies abroad.

n

At the time, IOCs were required to repatriate 50 per cent of their proceeds immediately, with the remaining 50 per cent to be repatriated 90 days after the inflow, and were also subject to new rules governing cash pooling.

n

These rules required prior approval from the Central Bank of Nigeria for repatriation under the cash pooling framework, alongside detailed statements of expenditure incurred before pooling.

n

The apex bank further clarified these measures, allowing IOCs to pool 50 per cent of their export proceeds while using the remaining funds to settle financial obligations within Nigeria over 90 days.

n

IOCs were also permitted to sell the 50 per cent balance of their repatriated proceeds to authorised foreign exchange dealers, but the new circular is expected to ease constraints faced by oil firms in accessing their foreign exchange earnings.