Trapped foreign airlines’ fund rises 51% to $700m

It seems there is no respite coming the way of foreign airlines in Nigeria over their funds trapped in the country’s foreign exchange difficulties.

The volume of trapped funds, according to Vanguard, is still rising, hitting $700 million, about 51 percent from the $346 million in September, 2022, despite the intervention by the Central Bank of Nigeria.

Recall that in August 2022, the CBN said it will release $265 million out of $456 million total outstanding due to the airlines, but in September, the airlines lamented that they were only able to access 50 per cent or $110 million of the amount, leaving a balance of $346 million.

Foreign airlines collect Naira for their tickets to customers and exchange the same for foreign currencies for their operations.

But recently they said they have been unable to get the exchange executed through the official foreign exchange market due to scarcity of foreign exchange resources.

However, at the backdrop of this development, the CBN, Governor, Godwin Emefiele, cautioned the foreign airlines against blackmailing the country, stressing that the apex bank doesn’t and cannot print dollars.

Speaking during a meeting between the House of Representatives, International Air Transportation Association, Airlines Operators of Nigeria, and representatives of the federal government, Emefiele noted that it was unacceptable for foreign airlines to resort to “blackmail” against the country because of their trapped funds.

He said, “Everyone is calling on CBN to release blocked funds, and I am doing everything I can to provide dollars for you to repatriate your money.

“We used our discretion to allocate $265 million to the foreign airlines, broken down into spot and forward. We did $110 million on the spot and the rest in 60 days forward.

“On that day, we allocated to IATA $32 million through UBA. Qatar Airways, $22.8 million through Standard Chartered; Emirates, $19.6 million through Access Bank; British Airway, $5.5 million through GTB; Virgin Atlantic, $4.8 million through Zenith and others.

“How then can they go about and begin to say that they have not received money? This is an extra allocation. This is something I have told you (foreign airlines) that we will continue to do so that you will not blackmail the country. $120 million will be due on the 31 of October.

“I can print naira, even though I have been accused of over-printing naira, but I cannot print dollar. We have to either earn it or borrow it.

“Foreign airlines should respect the bilateral aviation services agreement l as it will tackle the problem of unrepatriated funds.

“When you allow Nigerian airlines to fly in your country, what the airlines will do is charge naira as we expect foreign airlines to charge. You cannot be flying 21 flights into Nigeria and you do not allow Nigerian airlines to land in your country and when they land, you intimidate them with sniffer dogs and do not allow them to carry out maintenance checks.”

Similarly, the Chairman of United Nigeria Airlines, Obiora Okonkwo, said, “This forex issue is affecting everybody. Today, manufacturers go to the bank to put in an invoice of $1 million and at the end of the day they might be lucky to get $50,000, this is the situation we find ourselves in, it is not a CBN issue as they can only give what is in their coffer.

“In a situation like this, these airlines could have a more creative way of spending their money, if there are bills they are paying in foreign currency they could negotiate with the Nigerian Civil Aviation Authority, NCAA, or other authority to give them a waiver so that they can use Naira to pay for these bills.

“If they want $400 million as of today, they can talk to about two or three banks in their country who will get them an I & E window and this will be over. If we the local operators can do that, why can’t they?

“We are watching, if CBN can give them the said amount, we will be happy because we know the money is there. We will also put up our bills which are also landing. They should also give us, the local operators, as foreign airlines cannot be given preferential rates.”

Meanwhile, a representative of IATA, Samson Fatokun, said about $700 million of foreign airlines are still trapped despite the intervention of the CBN.

“The CBN should provide a timeline of how the funds are to be repatriated to assure the international airline operators.

“What we have right now is $700 million — our balance is $700 million. The airlines are reasonable by saying that the federal government of Nigeria should give them a plan for repatriation,” he said.