Despite the Central Bank of Nigeria (CBN) disbursing the initial $61 million from the $800 million owed by the Federal Government, foreign airlines operating in Nigeria, represented by the Association of Foreign Airlines and Representatives in Nigeria (AFARN), continue to voice discontent.
Last week, AFARN conveyed dissatisfaction with the amount, insisting that it falls short of what is required to sustain its operations in the country.
AFARN had said that it was concerned about the perceived low priority given to clearing the foreign exchange payment backlog by President Bola Tinubu’s administration, potentially leading to a situation akin to Fly Emirates, which suspended operations in the country.
In a statement from Hakama Sidi Ali, the acting director of corporate communications at the CBN, it was disclosed on Wednesday in Abuja that the central bank has successfully cleared the entire liability of 14 banks.
Additionally, settlements have been initiated with foreign airlines, but these efforts are deemed insufficient by the carriers.
Addressing concerns at a recent press conference at the Murtala Muhammed International Airport, Lagos, Kingsley Nwokoma, President of AFARN, criticised the $61 million recently released by the CBN as insignificant.
He expressed frustration that the government lacks a planned payment schedule to address the trapped funds, hindering effective financial planning for the affected airlines.
Issuing a caution, he highlighted that a failure to promptly resolve the debt crisis might lead some airlines to cease operations in Nigeria, following the precedent set by Etihad and Emirates Airlines.
Expressing regret, he pointed out that the federal government’s violation of Bilateral Air Service Agreement (BASA) arrangements with the airlines’ respective countries portrayed a negative image of Nigeria.
He identified the blocked funds as a contributing factor to elevated airfares departing from Nigeria, revealing that the country was losing potential travellers to neighbouring African nations with comparatively lower fares.
Nwokoma explained that for them to continue servicing the Nigerian market, most of the airlines had to take funds from their operations in other countries, a situation he claims is not only unsustainable but capable of hurting their bottom line.
He said, “We are not saying the government should pay all, but the government should have a plan to pay a chunk of the money every quarter. The fear is that if it continues like this, some of the airlines may go.
“The last conversation we had with Mr. Festus Keyamo, the Minister of Aviation and Aerospace Development, seemed good. He sounded serious about the payment, and they have done $61 million thus far.
“Nigeria is just a very strange country. Some are still saying that the airlines should not be asking for any money from Nigeria. What is BASA? BASA is signed by countries and not airlines. We signed our commitment to the BASA, and we are not doing anything about it.
“If all countries are defaulting like Nigeria, there will not be any airline that comes into the country again. The aviation industry is predicated on the U.S dollars. You pay your catering, handling, hotel and a lot of things in dollars and if you don’t pay, your crew would be sent out.”
Nwokoma also reemphasised his stance over this trapped funds issue when he spoke with Bloomberg over the phone on Saturday.
He advised the federal government to discuss with the foreign airlines the modalities of payment for the blocked funds.
“The foreign airlines are not talking about it because they felt it is a little drop. It is not something to be too excited about. If we have had about $300 million now, or half of what the airlines are being owed, then, you can say there is hope.
“The government should sit with the foreign airlines just like how you sign your BASA agreements and agree on quarterly payment of these funds. The government should please keep to that agreement. By then, we will be making progress,” he said.
Joining the calls for these funds to be released are Seyi Adewale, the chief executive officer of Mainstream Cargo Limited, and John Ojikutu, CEO of Centurion Aviation Security and Safety Consult.
Adewale commended the federal government for taking the right steps to restore cordial relationships with these foreign airlines by paying this amount of money, but believes that more needs to be done to release their trapped funds in the country.
He said, “It’s a good development to note that the federal government has deemed it fit to address the dire financial situation the foreign airlines have been subjected to because of their ‘blocked funds’.
However, this sum appears to be small compared to the accruing balances.”
Meanwhile, Ojikutu offered a solution to this debacle.
He urged the federal government to make the dollars earned from the operations of commercial aviation services operators such as NAMA, NCAA, NAHCO, Sahcol, and fuel marketers be domiciled with it.
These funds, it suggests, should be used to settle the dollar demands of these foreign airlines through them operating a domiciliary account in any of the commercial banks in the country.
Ojikutu said that the commercial service operators can exchange the dollars they deposit for naira as required, and the provision of dollars to these operators will be granted only upon special request.
This solution isn’t new, he mentioned, claiming that it had been used during the time of President Olusegun Obasanjo to ensure the availability of dollars outside of the CBN.
He said, “This problem with the trapped monies of the foreign airlines cannot be solved without finding out how much forex is earned by the commercial aviation service operators, which include FAAN, NAMA, NCAA, NAHCO, Sahcol, and Fuel marketers. My calculations on charges for passengers, air traffic, cargo, fuel, etc. give approximately $2.5 billion annually.
“OBJ, in a public hearing in Aso Rock, Abuja, in 2007, directed that these monies should be domiciled in the CBN and the naira values collected.
The aim was to add it to the Federation Account in forex.
“The operators can apply whenever they have the need for it.”
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