FG pays $600m owed foreign airlines

The Federal Government says it has finally cleared the backlog of debts owed foreign airlines operating in the country.

According to the government, the debt, which was about $600m at the peak of the recent recession, has been paid despite the paucity of funds confronting the nation at present.

It explained that the debt dragged on for a while because the country was faced with scarce foreign exchange occasioned by lower crude oil earnings, a development that prevented the international carriers from repatriating revenues to their respective home countries.

The Minister of State for Aviation, Senator Hadi Sirika, who described the settlement of the debt as one of the recent progress made in the aviation sector, observed that some foreign airlines had threatened to leave Nigeria if the government failed to clear the debt.

“We did the best that we can to clear the backlog of millions of dollars owed the foreign airlines,” an elated Sirika told delegates at the just concluded 4th Aviation Stakeholders’ Forum in Abuja.

In September last year, international carriers operating in Nigeria had confronted the Federal Government on issues concerning the full repatriation of their funds.

Although they admitted at the time that Nigeria was not the only country indebted to international carriers as a result of the low crude oil prices, the airlines stressed that the debt was affecting their operations negatively.

During the peak of the oil price crash, countries like Venezuela, which was the worst hit, reportedly owed foreign airlines $3.78bn; Sudan, $360m; Egypt, $291m; and Angola, $237m.

Nigeria was gradually releasing the trapped funds to the airlines and as of August last year, the amount that remained outstanding was about $175m, which, according to the airlines, accrued from ticket sales.

The International Air Transport Association said mid last year that the Central Bank of Nigeria commenced the gradual payment of the trapped funds in 2017, cutting it down from about $600m to $175m.

The improvement in payment was attributed to increased revenues from oil sales, which was due to crude price increase in the international market.

IATA, however, observed that the slow remittance of the funds was impacting negatively on the operations of the affected carriers, adding that the inability of foreign airlines to repatriate their earnings forced Iberia and United Airlines to stop operations to Nigeria.

But in his address at the just concluded aviation forum, Sirika stated that the international airlines had a good reason to demand for the repatriation of their funds, as the Federal Government would also not allow the funds of any Nigerian operator to be trapped in a foreign country.

Based on this, the minister stated that the government recently ensured that it cleared the millions of dollars due to the foreign airlines.

He said, “On special forex window, when we came in, there were several cases of millions of dollars being owed international airlines. We thought this is not right because any Nigerian entrepreneur that will be operating in another country, we will not sit back and allow that airline’s funds to be trapped in a country that is not Nigeria.

“We will ensure that they (the airlines) are able to repatriate their money. So, what is sauce for the goose is also sauce for the gander; and right there, we did the best that we could to ensure that we cleared all the backlog of those hundreds of millions of dollars owed foreign airlines. And, of course, you will agree with me that it is a very wrong time to ask Nigeria to part with money, but that was done.”

Sirika also stated that the Federal Government was supporting indigenous carriers as well, adding that it was doing so by cutting down on import duties and taxes that were being charged local operators.

 

Credits/Sources: www.punchng.com