The Central Bank of Nigeria, CBN, has stopped international oil companies (IOCs) operating in Nigeria from immediately remitting 100 per cent of their forex proceeds to their parent company abroad amid continued Naira free fall against the US dollar at the foreign exchange market.
The apex bank’s Director of Trade and Exchange, Hassan Mahmud, disclosed this in a new policy circular titled ‘Requirements for Foreign Currency on Behalf of International Oil Companies (IOCs) in Nigeria’.
The Apex bank said Cash Polling impacts liquidity in the domestic forex market.
According to the new guidelines, IOCs will now be allowed to repatriate only 50 per cent of their proceeds immediately, while the other 50 per cent will be repatriated 90 days from the day of inflow.
“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 per cent may be repatriated after 90 days from the date of inflow of export proceeds.”
Also, the CBN issued new rules that will guide “cash polling” by IOCs, which include approval from the CBN before the repatriation of funds under the cash polling framework, and the parent entity of IOCs will have to reach an agreement with the CBN before “cash polling.”
It added that IOCs must submit a statement of expenditure incurred in the period before the cash polling.
“Evidence of the source of foreign exchange inflow.” “Completion of relevant forex form(s) as required under extant regulations”, CBN said.
