CBN to Begin Special FOREX Intervention for Airlines

The Central Bank of Nigeria (CBN) has approved a Special Secondary Market Intervention Retail Sales (SMIS) for airlines operating in the country to enable them to access foreign exchange.

James Odaudu, Deputy Director, Press and Public Affairs, Ministry of Transportation, announced the plan in a statement  in Abuja on Friday.

Odaudu explained that the intervention was a direct result of the interaction with CBN by the Minister of State, Aviation, Sen. Hadi Sirika, on behalf of the airlines.

He said the intervention was an important one off exercise dedicated to the clearance of the backlog of matured foreign exchange obligations.

Odaudu said the resolution by the apex bank to intervene in the Inter-Bank foreign exchange market through forward settlement was expected to engender market confidence.

According to him, it will also ensure access to Forex by the airlines to settle their obligations and sustain the integrity of the Nigerian Inter-Bank Foreign Exchange market.

“The import of this peculiar exercise is that the CBN will not apply the relevant provisions under clause 2.4.3 (i) of its Revised Guidelines for the Operation of the Nigerian Inter-Bank Foreign Exchange Market.

It provides that ‘all SMIS bids shall be submitted to the CBN through the FXPDs.’

Consequently, CBN shall receive bids from all the authorised dealers.
“The CBN will also not apply the relevant provisions that ‘Spot Forex sold to any particular end-user shall not exceed one per cent of the overall available funds on offer at each SMIS session.’

According to the CBN, whereas the bids are on Spot Forex basis as the Authorised Dealers’ accounts with the CBN will be debited in full for the naira equivalent of the dollar bid amount.

The CBN will settle the bids through forward settlements of two months,’’  Odaudu said.

He said that customers that were not willing to accept the settlement terms had been advised not to participate in this Special SMIS Retail.

Odaudu credited Sirika as describing the special intervention by CBN as a “great relief’’ for airline operators in the country.

He said the operators had complained bitterly over their inability to access the required Foreign Exchange to settle the backlog of their obligations which had adversely affected their operations.

Sirika said the aviation sector was critical to the nation’s economy, adding that CBN had taken the right decision that would strengthen existing airlines and inspire confidence in aspiring operators.

Airline operators at a recent meeting with the minister complained of a lack of access to Forex.

The airlines said that many airlines were not operating profitably.

Sirika, at the meeting promised, to take up the issues with the authorities of the apex bank and seek for intervention on their behalf.

Also to benefit from the intervention are manufacturing companies and producers of agricultural chemicals.