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Again, CBN clarifies issues on IOC’s 50% repatriated funds

THE Central Bank of Nigeria (CBN) has further clarified the “Cash Pooling” of repatriated oil and gas export proceeds by International Oil Companies (IOCs).

The CBN had made a similar clarification before, read it here.

Cash pooling is the consolidation of a company’s various bank accounts into a single account or “pool,” which is used to manage the company’s overall cash position, The ICIR can report.

This was contained in a circular it issued to all authorised dealer banks on Friday, May 31.

It said the clarification became necessary following the request it received on the foreign exchange sales at the Nigeria Foreign Exchange Market.

“Following the release of the circular dated May 06, 2024, referenced: TED/FEM/PUB/FPC/001/008, in respect of Cash Pooling by banks on behalf of IOCS, we received several requests for clarification on item No 3(8) on forex sales at the Nigeria Foreign Exchange Market,” CBN stated.

Sequel to its previous circulars and the demands for further clarification, the apex bank said the IOCs could sell a 50 per cent balance of their repatriated export proceeds to authorised foreign exchange dealers.

“The 50 per cent balance of the repatriated export proceeds may be sold to Authorized Dealers or eligible users of foreign exchange with eligible transactions.

“If the IOC does not have any financial obligation to settle with the funds during or after the 90-day retention period, the 50 per cent balance may also be sold wholly as stated in (1) above,”  CBN stated.

Recall, on February 14, CBN issued a directive that stopped IOCs from repatriating 100 per cent of their proceeds offshore to their parent companies as it creates liquidity shortfalls in the Nigeria foreign exchange market.




     

     

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    It then directed IOCs to pool 50 per cent of the repatriated proceeds immediately or when needed and the 50 per cent balance to be repatriated 90 days after the export proceeds’ inflow date.

    But in another circular dated May 6, CBN maintained that the initial 50 per cent of the repatriated proceeds could be pooled immediately or as when required.

    It added that the 50 per cent balance of the repatriated export proceeds could be allocated to meet financial obligations within Nigeria, as and when required, within the stipulated 90-day period.

    In the new clarification guideline, however, the apex bank said the IOCs could sell the balance of 50 per cent of their proceeds to authorised dealer banks.

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