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Senate orders CBN to release $717.4m trapped funds to foreign airlines

The Senate, on Wednesday, May 17, directed the Central Bank of Nigeria (CBN) to release $717,478,606 airlines funds trapped in the country.

The Senate also called on the CBN to allocate $25 million to airlines operating in Nigeria at its fourth-nightly dollar auction.

These resolutions were reached sequel to the consideration of a motion titled, ‘Current Issues on airlines blocked funds in Nigeria’, sponsored by Sen. Biodun Olujimi (PDP-Ekiti) at the plenary in Abuja.

Olujimi chairs the Senate Committee on Aviation.

The vice chairman of the committee, Sen. Bala Na’Allah (APC-Kebbi) presented the motion on behalf of Olujimi.

The upper chamber of the National Assembly also called on the Federal Government to urgently reverse the current trend of increasing airlines blocked funds in Nigeria.

It called on President Muhammadu Buhari to direct the CBN Governor, Godwin Emefiele, to pay up the blocked funds to the affected airlines.

The Senate further appealed to the airlines operating in the country not to withdraw their services, saying efforts were ongoing to resolve the issue.

Moving the motion, Na’Allah said since January 2021, Nigeria has been the most challenging country in the world for the airlines to repatriate their funds to support their operation.

In February, Nigeria alone accounted for 44 per cent of total airlines blocked funds in the entire world.

The total airlines blocked funds in Nigeria as of March amounted to $717.4 million comprising matured bids that the CBN was yet to deliver, bids yet to mature, and cash balances in airlines’ accounts for repatriation.

The matured bids not delivered by CBN amounted to $186.5 million accounting for 26 per cent of total blocked funds while three stakeholders (IATA, Qatar Airways, and Ethiopian Airlines) accounted for 57 per cent of total blocked funds.

A review of airlines’ blocked funds in Nigeria in the last six months shows an average month-on-month increase of $49.3 million.

The consequences of these blocked funds are cheap tickets are not available in Nigeria because taxes and inflation will have eroded the profit when the funds are kept for a very long time.

This makes tickets very expensive and limited because neighbouring countries get cheap tickets because of prompt payments due to prompt repatriation of funds.

Senators in their contributions supported the motion and voted to approve the prayers when they were put to voice vote by the Senate President, Ahmad Lawan.

The Star