Nigerian airline operators are currently at cross-purposes with oil marketers over the rising prices of the aviation fuel, also regarded as the JET-A1.
Although marketers have defended the price, which is as high as N600 per litre, airlines have insisted that it is too high, accusing marketers of exploitation. Hence, airlines have threatened to shut down, forcing the NNPC to intervene by importing two cargoes of the product and selling at lower prices to cushion the effect of high operational costs on airlines.
The Chairman of the United Nigeria Airlines and Spokesperson of Airline Operators of Nigeria, Obiora Okonkwo, during an interview session mentioned that the current price was too high and he insisted that the price of aviation fuel per litre should not go as high as it was currently being sold.
He went further to mention, “For a country like Nigeria that currently does not have internal production, this fuel is a deregulated product, and the supply comes from outside Nigeria. Therefore, oil prices jumping from about $60 to $120 unexpectedly would directly affect the price.
The former Chairman of the Major Oil Marketers of Nigeria and Chairman, 11 Plc, Tunji Oyebanji, told the media that the NNPC was able to sell at a lesser price because it could access the foreign exchange.
However, in a bid to cushion the effects of the scarcity and high price, the House of Reps said it had entered into an agreement with Oyebanji who, a few weeks ago, had six million litres in his tank. Oyebanji, in an interview with the media, said he had offered to help by bringing down the cost, selling to airlines at N480/litre. However, prices soon shot up after his six million stock got exhausted.
As of Monday, the product was sold in Lagos at N598 per litre, N642 in Kano, N640 in Kaduna, N627 in Abuja, N635 in Enugu, and Anambra and N628 in Port Harcourt.
The Executive Secretary of MOMAN, Clement Isong, has advised Nigerians to “adjust” to current market trends as the crises were not peculiar to the country. He stated that “Nigerians should understand that there is a situation in the world and we must adjust and sort out ourselves. Government cannot do everything for us. Currently, the government does not have money to sort out the education sector, health, agriculture, and other sectors. ASSU is currently on strike, and the government can’t do anything about it.”
He added that currently there was a scarcity of aviation fuel all over the world, adding that no country in Africa had a single drop of ATK in its tanks. However, “The foreign airlines base their calculations on PLATTS plus Premium and margins,” he said.
PLATTS is an international price reference closest to the country where the refinery is located, while premium cost is marketers’ transportation, plus logistics, plus margins.
He said the NNPC bought the product at cheaper rates and could afford to sell it cheap to airlines. However, a top oil marketer had told the media that the Federal Government was currently “broke” and would not afford to subsidize JET-A1. The airlines should just go ahead and increase airfares,” he said.
However, he revealed that local airlines had claimed they could import the product at N300/litre, adding that the NNPC had beckoned on them to come for import permits but they had declined.
The National Operations Controller, the Independent Petroleum Marketers Association of Nigeria, Mike Osatuyi, has listed reasons for the price hike of aviation fuel as short supply, increase in crude oil price, and high dollar exchange rate to naira at the black market.
“This means that for a country that has a weak currency like Nigeria, deregulation will not do any good to that country. Because those who are going to be the marketers will source FOREX anywhere, and then buy aviation fuel at higher prices. After importing it, they will sell it at very expensive prices. This way, the airline operators and Nigerians will continue to groan in pain.
Mr. Mike went ahead to state that, “We see what has happened to diesel and to the sectors using diesel. Everything is collapsing, companies are shutting down, and people are getting fired. The income taxes of companies using diesel will go down this year, profit will go down because they are not breaking even.”
He said marketers were not to blame for the high prices of aviation fuel because the model adopted was deregulation, adding that Nigeria was too weak to deregulate the prices of products.
