Home / Aviation News / Sirika gets Central Bank to include airlines in forex settlement
Minister of Aviation, Senator Hadi Sirika

Sirika gets Central Bank to include airlines in forex settlement

MINISTER of State (Aviation), Senator Hadi Sirika on behalf of foreign airlines and domestic operators under the aegis of Airlines Operators of Nigeria (AON), has got the Central Bank of Nigeria (CBN) to include airlines operating from Nigeria in the Inter-Bank Foreign Exchange market through forward settlement.

Airlines can now have a cause to smile and surmount the many challenges attributed to the lack of forex in the business for maintenance, training and acquisition or lease of aircraft as well as other factors.

Sirika in his remark after this was communicated to him said, “This is after much intervention on behalf of the airlines both foreign and domestic. The Central Bank has yielded and we are happy because this means a lot to us and the airlines. They have been going through a lot and we are so happy that this is will be a huge succor to their operations”.

In a circular from CBN to the concern sectors, “In order to further engender market confidence, ensure access to FX by end users and sustain the integrity of the Nigerian Inter-bank FX market, the Central Bank of Nigeria (CBN) has resolved to intervene in the Inter-bank FX market through forward settlement”.

The exercise is to clear backlog of the sectors concerned. CBN stated that, “This is an important one-off exercise dedicated to the clearance of the backlog of matured FX obligations for: Raw materials and machinery for manufacturing companies; Agricultural chemicals; and Airlines”.

It is noteworthy to recollect that the Minister made frantic efforts by facilitating series of meetings between airlines and the management of the Central Bank to ameliorate the current challenges faced by the operators.

The details of the intervention are highlighted below:

Type of Intervention: Special Secondary Market Intervention Sales (SMIS) –Retail.

Informing about “Bid Agents” while stating the peculiarity of the exercise CBN said, “Due to the peculiarity of this exercise 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 (hereinafter referred to as the Guidelines) which provides that “all SMIS bids shall be submitted to the CBN through the FXPDs”.  Consequently, CBN shall receive bids from all the Authorized Dealers.

Allotted Amount per bidder, “The CBN will also not apply the relevant provisions under clause 2.4.3 (i) of the Guidelines which provide that “Spot FX sold to any particular end-user shall not exceed 1% of the overall available funds on offer at each SMIS session”.

Bid Period, “Authorized Dealers shall submit their customers’ bids to the advised e-mail address by 2:00pm. Any bid received after this time will be automatically disqualified”.

As regards Funding, the circular stated that, “Authorized Dealers should debit the customers’ accounts for the Naira equivalent of their bid”.

Spread, “Clause 2.4.2 (iii) of the Guidelines which provides that “there shall be no predetermined spread on Spot FX transactions executed through CBN intervention with the FXPDs” and the relevant area of Clause 2.4.3 (i) of the Guidelines which provides that “there shall be no predetermined spread on the sale of FX Forwards by Authorized Dealers to end-users” shall not apply for this Special SMIS-Retail. Consequently, Authorized Dealers are allowed to earn 50kobo on the customers’ bids.

On Settlement Terms of the Special SMIS – Retail, “ Whereas the bids are on Spot FX basis as the Authorized Dealers’ accounts with the CBN will be debited in full for the Naira equivalent of the USD bid amount, the CBN will settle the bids through forward settlements of 2 months. Customers that are not willing to accept the settlement terms are advised not to participate in this Special SMIS – Retail.

It should be noted that DMBs participating in the Special SMIS must be willing to open new LCs equivalent to the amount of forwards intervention received for the importation of raw materials, plant and machinery by manufacturers”.

“Forward Rate: Bids will be settled spot through a multiple-price book building process and will cut-off at a marginal rate (to be disclosed after the conclusion of the Special SMIS – Retail process). Bids will be settled at the marginal rate that clears the amount on offer. Customers should note that the forward rate may be higher than the initial rate(s) of their bids and will be debited the additional Naira equivalent of their bids. Customers not willing to accept the terms of the forward rate should not participate in this Special SMIS.

Transmission of bids: All bids should be submitted through the dedicated email address: smis@cbn.gov.ng.”

“CBN’s Rights: CBN reserves the right not to make a sale if it is of the impression that the exercise did not provide an effective price for the determination of the USD/Naira exchange rate, in which case, the CBN may choose to offer another Special SMIS (retail or wholesale) session.”

About NigerianFlightDeck

mm
Nigerianflightdeck is an online news and magazine platform reporting business stories with a bias for aviation and travel. It is borne out of the intention to inform, educate as well as alter perceptions with balanced reportage.

Check Also

FAAN initiates AEP review at MMA to hasten emergency response

AS part of efforts to enhance safety of lives and property during incidents and accidents, …

International Operations: Senate heeds Onyema’s call, set to probe multiple designation

Let me make this clear, Air Peace will never be able to combat international aero-politics without the support of the government. We can only combat it if our government supports us. It is a shame that several Nigeria airlines have come here (Dubai) and they were pushed out either through unfair competition or some arm-twisting tactics, it is very unfair. The only plan we have is the plan of sustainability, to sustain our operations to the best of our abilities. That is so far as we can go, if we are not supported. So Air Peace needs the support of everybody.

SON clamps down on importer of N38m substandard galvanized roofing sheets

OVER N38 million worth of substandard galvanized roofing sheet were seized a ware house in …

NATCA inducts new Air Traffic Controllers

PRESIDENT of Nigerian Air Traffic Controllers’ Association Mr Agoro, Abayomi Omotayo has disclosed that the …

Lagos Aviation Academy rates NCAA’s ATO approval as Half Year 2019 milestone

LAGOS Aviation Academy (LAA), has announced that its certification by the Nigerian Civil Aviation Authority …

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this:
Skip to toolbar