The Central Bank of Nigeria has put a halt to international oil companies (IOCs) operating in the country from immediately transferring 100% of their forex proceeds to their foreign parent company. This decision comes as the Naira continues to experience a freefall against the US dollar in the foreign exchange market.
Hassan Mahmud, the apex bank’s Director of Trade and Exchange, revealed this new policy in a circular titled ‘Requirements for Foreign Currency on Behalf of International Oil Companies (IOCs) in Nigeria’. The circular highlighted that cash polling by IOCs has been affecting liquidity in the domestic forex market.
Under the new guidelines, IOCs are now permitted to repatriate only 50% of their proceeds immediately, while the remaining 50% will be repatriated 90 days from the day of inflow.
The CBN also introduced new rules for “cash polling” by IOCs, which include the need for CBN approval before funds can be repatriated under the cash polling framework. Additionally, the parent entities of IOCs will have to reach an agreement with the CBN before engaging in “cash polling”.
The CBN emphasized the necessity of evidence of the source of foreign exchange inflow and the completion of relevant forex forms as required under existing regulations.
These measures have been implemented in line with the ongoing reforms in the foreign exchange market to address the impact of cash pooling on liquidity within the domestic foreign exchange market.