The Central Bank of Nigeria (CBN) has stopped International Oil Companies (IOCs) operating in Nigeria from bulk FX proceeds transfers to their home countries abroad.
The IOCs are now required to send 50 per cent of the FX proceeds at once, and the other 50 per cent after 90 days.
The move is expected to shore up dollar liquidity in the Nigerian FX markets.
A circular released yesterday and signed by CBN Director, Trade and Exchange Department, Hassan Mahmud, directed authorised dealer banks to allow IOCs to repatriate such funds in batches to reduce their negative effects on the foreign exchange market.
“A maximum of 50 percent in the first instance, while a balance of 50 percent could be repatriated after 90 days from the date of the inflow of the export proceeds,” the circular said.
“The Central Bank of Nigeria (CBN) has observed that proceeds of 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 pooling”). This has an impact on liquidity in the foreign exchange market,” the circular, with reference number TED/FEM/PUB/FPC/001/004, said.
“While the CBN strongly supports the need for IOCs to have easy access to their export proceeds, particularly to meet their offshore obligations, this must be done with minimal negative impact on liquidity in the Nigerian 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 banks are allowed to pool cash on behalf of IOCs, subject to a maximum of 50 per cent of the repatriated export proceeds in the first instance.
The, the balance of 50 per cent may be repatriated after 90 days from the date of inflow of the export proceeds. “The above shall be subject to 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, statement of expenditure incurred by the IOC in the immediate past period relating to the “Cash Pooling, evidence of the source of foreign exchange inflows and completion of relevant Forex Form(s) as required under extant regulations.
The apex bank said it remains committed to promoting transparency in the Nigerian Foreign Exchange Market and will continue to develop policies to stabilize and further deepen the market. It advised all banks to comply with this circular and inform their customers accordingly.
The apex bank has also in a separate circular, directed that all authorized dealers to pay Personal and Business Travel, allowances (PTA/BTA) to their customers through electronic channels only, including debit or credit cards instead of cash.
“In line with the Bank’s commitment to ensure transparency and stability in the foreign exchange market and avoid foreign exchange malpractices, All Authorized Dealer Banks shall henceforth effect payout of PTA/BTA through electronic channels only, including debit or credit cards. For the avoidance of doubt, payment of PTA/BTA by cash is no longer permitted,” the circular signed by Mahmud said.
 has stopped International Oil Companies (IOCs) operating in Nigeria from bulk FX proceeds transfers to th){kind=link}