CBN Extends N500bn Power and Real Sector Fund to Aviation Industry

The Central Bank of Nigeria (CBN) has extended the N500 billion facility for investment in power projects and the real sector to the Aviation Industry.
According to a statement signed by Mohammed Abdullahi, head Corporate Communications of the Central Bank of Nigeria (CBN) explained that airlines can now partake from the fund and those that are indebted to banks can refinance their loans and amortise them over a period of 10 to15 years.
The decision by the Central bank of Nigeria (CBN) is based on the fact that most of the Airlines are heavily indebted to banks which constitute a risk to the banks concerned and by extension the banking sector. It is also to assist in propping up the demand side to facilitate continued growth of the economy, the statement said.
The CBN believes that this would help put off the much feared finance crisis threatening the smooth operations of the aviation industry.
The fund is to be channeled through the Bank of Industry (BoI) for on-lending to banks at a maximum interest rate of 1.0 per cent for disbursement of loans at not more than 7.0 per cent.
It is designed to boost the capacities in the manufacturing, Small and Medium Enterprises (SMEs) and power sectors.
The power sector coverage is for investment in power projects dedicated to industrial clusters.
A technical committee comprising the CBN, BoI, the Manufacturers Association of Nigeria (MAN), National Association of Small and Medium Enterprises (NASME), and the Bankers’ Committee, has been established to implement the modalities of the fund.
Ibrahim Auyo, managing director of the Nigerian Airspace Management Agency (NAMA) said domestic airlines have owed the agency over N4 billion since 2002 while it spends N200 million on diesel to power equipment across the country.
He disclosed that the debt is in two installments of over N2 billion each between 2001-2007 and between 2007 and 2009.
However, some airlines have started reconciling their account with the NAMA, he added.
He explained that the International Air Transport Association (IATA) helps the NAMA to collect over flyer charges, stressing that “Nigerian airlines should try as much as possible to pay all their debts for the services rendered by the agency.”