CBN okays oil firms spending 50 per cent of funds on obligations

Ofirms operating in Nigeria are now allowed to spend 50 per cent balance of the repatriated export proceeds on financial obligations, the Central Bank of Nigeria ( CBN) has said.

The Director , Trade and Exchange Department of the apex bank, Hassan Mahmud, in a circular he signed yesterday in Abuja, the CBN stated that the new directive is to relax earlier restriction on repatriation of forex proceeds by oil companies.

The new circular said that international oil firms could repatriate 50 per cent of their proceeds in the first instance and then the other half after 90 days.

The CBN said that the decision was a reaction to recent enquiries by banks and other stakeholders on its circular referenced

TED/ FEM/ PUB/ FPC/ 001/ 004, in respect of Cash Pooling requests by banks on behalf of IOCS.

The new directive said: "The initial 50 per cent of the repatriated proceeds can be pooled immediately or as and when required. Banks may submit the request for cash pooling ahead of the expected date of receipt, supported by the required documentations, for approval by the CBN.

"The 50 per cent balance of the repatriated export proceeds could be used to settle financial obligations in Nigeria, whenever required, during the prescribed 90- day period."

Providing more clarity, the CBN added: “Petroleum profit tax, royalty, domestic contractor invoices, cash call, domestic loan principal and interest payment, transaction taxes, education tax and forex sales at the Nigerian Foreign Exchange Market are eligible for settlement from the balance 50 per cent."

In the earlier circular issued in February 2024, the CBN stopped international oil companies from repatriating 100 per cent foreign exchange proceeds to their mother companies overseas at once.