Nigeria: CBN Implements New Policy on Foreign Oil Firms’ FX Repatriation

The Central Bank of Nigeria (CBN) has introduced a new directive restricting international oil companies (IOCs) from repatriating 100% of their foreign exchange (FX) proceeds at once.

According to a circular dated February 14, 2024, issued by the Director of the Trade and Exchange Department at the CBN, Hassan Mahmud, IOCs are now permitted to repatriate only 50% of their proceeds initially, with the remaining half accessible after a 90-day period.

The CBN highlighted the practice of “cash pooling,” where proceeds from crude oil exports by IOCs in Nigeria are transferred offshore to fund parent accounts, as a factor affecting liquidity in the domestic FX market.

“To address this trend and align with ongoing reforms in the foreign exchange market, the CBN has deemed it necessary to implement measures,” stated the apex bank in its directive.

Key provisions of the directive include:

1. Banks are authorized to pool cash on behalf of IOCs, with a maximum of 50% of repatriated export proceeds allowed in the first instance.
2. The remaining 50% can be repatriated after a 90-day period from the date of inflow of export proceeds.

This policy adjustment aims to manage liquidity in the domestic FX market more effectively and ensure stability in line with ongoing reforms.