CBN Lists Education, Petroleum Tax.

Central Bank of Nigeria has provided additional clarifications on the circular concerning the cash pooling of repatriated oil and gas export proceeds by international oil companies.

The apex bank specified the expenses that can be settled from 50 per cent of the repatriated fund, which includes petroleum tax, royalty, domestic contractor invoices, cash calls, domestic loan payments, as well as interest payments, education tax, transaction tax, and forex sales in the Nigerian foreign exchange market.

In the previous circular, the CBN said it identified a common practice among international oil companies where they transfer crude oil export proceeds offshore for cash pooling, while, this practice had a direct impact on the domestic foreign exchange market liquidity, and to mitigate these negative effects and as part of ongoing forex market reforms, while, the CBN introduced specific measures and the new guidelines, banks are now allowed to pool cash for international oil companies.

The circular said, international oil companies are permitted to pool the first 50 per cent of the repatriated proceeds either immediately or when needed.

In the clarification, CBN said, banks have the green light to forward cash pooling requests before the actual date of receipt, which must be backed by the necessary documentation for CBN’s approval, while, the remaining 50 per cent of the repatriated export proceeds can be allocated to meet financial obligations within Nigeria, as and when required, within the stipulated 90-day period.