Fx repatriation: CBN bars oil firms from remitting 100% revenue abroad
…Halts payment of BTA/PTA in cash
…Cacophony of postulations affecting stability of Fx market — Tinubu tells Govs
By our correspondents
The Central Bank of Nigeria (CBN) has issued a new directive to International Oil Companies (IOCs) operating within the country aimed at barring the companies from repatriating all their revenue to their offshore accounts.
This is in a bid to maintain liquidity in the domestic foreign exchange market, the Director of the Trade and Exchange Department, Hassan Mahmud said in a circular.
The circular highlighted the bank’s observation of the significant impact that the transfer of crude oil export proceeds offshore has on the domestic forex market.
The CBN has mandated that banks can now pool cash on behalf of IOCs but with a cap set at 50 percent of the repatriated export proceeds initially.
The remaining 50 percent can only be repatriated after a period of 90 days from the date of the inflow of the export proceeds.
The circular, entitled ‘Requirements for foreign currency cash pooling on behalf of International Oil Companies (IOCs) in Nigeria,’ specified that the repatriation of funds under the ‘cash pooling’ transaction will require prior approval from the CBN.
Additionally, the ‘cash pooling’ agreements with the parent entities of the IOCs operating in Nigeria must be clearly defined and approved.
The CBN’s directive is expected to have significant implications for the operations of IOCs in Nigeria, particularly in their financial management and planning strategies.
“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 percent of the repatriated export proceeds in the first instance.
“The balance 50 percent may be repatriated after 90 days from the date of inflow of export proceeds,” according to the circular.
Also, the Central Bank of Nigeria (CBN) has put a halt to the issuance of cash for Business Travel Allowance (BTA) and Personal Travel Allowance (PTA).
The Apex Bank announced that all such allowances are to be issued in cards, the bank has announced.
It said that the new measure was part of efforts towards making it so that only genuine travellers obtained BTA and PTA, going forward.
…Cacophony of postulations affecting stability of Fx market — Tinubu tells Governors
Meanwhile, President Bola Ahmed Tinubu has told Governors to desist from cacophony of postulations noting that it is affecting the stability of the Fx market.
The President spoke at a meeting with 36 state governors, attended by Vice-President Kashim Shettima, the National Security Adviser, the Inspector-General of Police, the Director-General of the DSS, and some ministers at the State House in Abuja on Thursday.
The President urged the governors to trust the Central Bank of Nigeria (CBN) with the management of the country’s monetary policy, emphasising the importance of allowing designated institutions to fulfill their mandate effectively.
He said the ‘’cacophony of postulations’’ on the fluctuation of foreign exchange rates was unduly affecting the market negatively.
‘’Every one of us cannot be an expert. If we have given someone an assignment, let us allow them to do it. If they cannot do it, then we find a way to quickly get them out of the system,’’ the President affirmed.
