Central Bank clarifies repatriated oil and gas proceeds utilization

The Central Bank of Nigeria (CBN) has clarified that the earnings from the sale of repatriated oil and gas can be used domestically to pay contractors’ invoices and fulfil Petroleum Tax requirements.

Dr Mahmoud Hassan, the apex bank’s Director of Trade and Exchange, stated in a circular dated May 6, 2024, referenced as TED/FEM/PUB/FPC/001/008, that following the initial 50 percent export proceeds cash pool allowed for oil and gas companies, the remaining 50 percent could be used to settle various obligations provided it remains in the nation for a minimum of 90 days before being removed.

In a previous circular, the bank had stipulated that only half of the earnings from the sale of oil and gas could be deducted from the immediately earned.

It stipulated that the remaining half had to be kept in the nation for a minimum of ninety days prior to being removed by the corporations.

But the CBN has made it clear in the most recent circular that the firms may use the fifty percent that needs to be retained in the nation for the allotted time.

According to the apex bank, “The initial 50 percent of repatriated exports proceeds can be pooled immediately or as at when required. Banks may submit requests for cash pooling ahead of the expected date of receipt, supported by the required documentation for approval by the CBN.

“The 50 percent balance of the repatriated exports proceeds could be used to settle financial obligations in Nigeria whenever required during the prescribed 90-day period.”

Apart from utilizing such repatriated proceeds for tax purposes and payment to contractors, the apex bank explained that they could be used for the payment of royalties, Cash Calls, loans repayment, forex sales at the Nigerian Foreign Exchange Market.