By Chinelo Obogo, [email protected]
Days after the Airline Operators of Nigeria (AON) cancelled plans to suspend flight operations over the high cost of aviation fuel, also known as jet A1, Daily Sun can reveal that the product is still not readily available to many airlines.
In March, flight operations were nearly grounded as all the scheduled operators could not access fuel and even when they could, it was purchased at over N500. However by last Friday, the AON said it would commence the suspension of flights on Monday, May 9, as it can no longer afford to purchase fuel at N700. The plan to suspend flights was later cancelled after intervention by the Ministry of Aviation and other industry stakeholders.
Fuel scarcity persists
The fuel crisis seemed not to abated as early on Thursday morning, Azman Air sent a message to its passengers apologising for the protracted delays and even cancellations of some of its flights, blaming it on the scarcity of aviation fuel The airline said that though there has been promising prospects address the problem, it became important to advice the general public that until there is resolution, disruption of flights may be unavoidable.
“Our obligation at Azman Air to deliver hassle free services to our esteemed customers is recently being hindered by incessant challenges facing the Nigerian aviation sector due to jet A1 price hike and scarcity. The paucity of this product has labelled our services with protracted delays and even cancellations thereby subjecting our customers to unintended hardships in getting to their destinations. Though there has been promising prospects to overturn this obstacle, it is important to advice the general public that until there is resolution, disruption of flights may be unavoidable. We totally understand the effect these disruptions poses on our passengers and we can only appeal and crave your understanding while we continue to navigate the situation,” Azman said.
The deputy Chief Executive Officer (CEO) of Dana, Sukhjinder Mann, in a message to its passengers recently, also revealed that they are again witnessing the scarcity of aviation fuel across the airports in Nigeria which has caused flight delays and cancellations but that they have the commitment of their fuel partners to service our requirements
“Unfortunately, we are again witnessing the scarcity of Jet A1 fuel across the airports in Nigeria, which has in some cases, caused recent flight delays. Our commitment towards offering a convenient and reliable schedule has never been in doubt and has always been centered on setting new standards in customer experience and redefining air travel and this communication is to reassure you that we have the commitment of our fuel partners to service our requirements,” Mann said.
When Daily Sun contacted the spokesperson of Air Peace, Stanley Olisa to ascertain what the situation is with regards to fuel supply, he said the airline is also finding it difficult to get fuel as the scarcity has persisted and has caused flight disruptions. The spokesperson of Air Air, Ola Banji, also confirmed to Daily Sun that aviation fuel is not readily available.
Oil marketers deny AON’s claims
The Managing Director of Cleanserve, Chris Ndulue, said the scarcity is not peculiar to Nigeria as countries like the UK are also experiencing it. He said the scarcity is caused by the Russia- Ukraine war and not created artificially by marketers as being alleged.
He denied claims by the AON that fuel is now being sold for N700, insisting that the price is between N540 and 580. He said the intervention of the Nigerian National Petroleum Corporation (NNPC) in the importation of aviation fuel is unnecessary and advised that the Central Bank of Nigeria should make forex available for marketers to import themselves.
“NNPC’s intervention is unnecessary. Without their intervention people will freely be importing. They have no business continuing to do that. CBN can give the dollars to the marketers but that is not necessary so that it won’t be interpreted as subsidy. The price is between N540-N580; I don’t understand why airlines are mentioning N700 per liter. There is no demon in the industry. When the price was N190 they were selling. Landing cost reflecting on the price. There is scarcity in the UK and others. It is because of the Russia- Ukraine war. The price of the product is largely market driven,” Ndulue said.
The Major Oil Marketers Association of Nigeria (MOMAN) also hit back at the AON, refuting their claims that aviation fuel is currently being sold at N700 per liter.
The executive secretary of MOMAN, Clement Isong, told journalists that contrary to the claims by AON, he is not aware that aviation fuel is sold currently anywhere at N700 per litre, insisting that the most the product is sold at is N580. He said the intervention by the Nigerian National Petroleum Corporation (NNPC) discouraged marketers from importing aviation fuel because it will be a bad business decision.
“I am not aware that aviation fuel is sold currently anywhere at N700 per litre. There has been an intervention by the Nigerian National Petroleum Corporation which is now bringing in aviation fuel. It gets into tank, all costs together, at about N500 per litre. If we use Ikeja (Murtala Mohammed Airport, local as a bench mark, it is sold there by marketers between N540 and N550 per litre. Nobody with common sense will go and bring in aviation fuel now that NNPC is bringing in product and selling it cheap.
“NNPC is bringing in the product because it is swapping it with crude and when it swaps it with crude it uses the Central Bank of Nigeria exchange rate of N419 to a dollar. Meanwhile the product is deregulated. So no normal person can go and get it at that exchange rate. You cannot use N589 (black market rate) to a dollar to bring in the product and sell at N550 per litre.
“It is carried by special trucks, so there are extra handling costs. Even with these costs, it is sold at the tarmac between N540 and N550 per litre in Lagos and by the time you carry it all over the country including transportation cost, it will be sold at about N570 or N580 at the farthest airport from Lagos. There is nowhere aviation fuel is sold at N700 per litre,” he said.
Reacting to the same issue, the chairman of MOMAN, Olumide Adeosun, said in a press statement that the petroleum products downstream industry which is engaged in logistics and distribution of fuel is suffering the impact of higher costs brought about by the post-covid world economy and the war between Russia and Ukraine.
He said aviation fuel is subject to international price movements which are currently suffering the twin shock of increased post pandemic demand and the ongoing sanctions against Russia, a large producer of petroleum products.
NASS wades in
To resolve the issue of cost and scarcity, the House of Representatives and the AON met last Monday and agreed that aviation fuel will be supplied to the airlines at N480 per litre for at least, three months after the Vice President of AON, Allen Onyema, said their situation worsened when the Nigerian National Petroleum Corporation (NNPC) refused to make available 25,000 metric tonnes of aviation fuel approved by President Muhammadu Buhari to be sold to them at landing rates to ameliorate the losses they suffered over the months.
At the meeting which was convened by the Speaker of the House, Femi Gbajabiamila, it was agreed that six million liters of aviation fuel would be made available at the rate of N480 to the operators through the intervention of the Central Bank of Nigeria (CBN). The meeting had in attendance the Group Managing Director of NNPC, Mele Kyari, the CBN governor, Godwin Emefiele, AON’s Onyema and other stakeholders. As a long term measure, the meeting also resolved that the operators would begin the process of application for their licence to import jet fuel directly for their operations.
“The NNPC and the airline operators both agreed that in the interim of three months, the marketers of choice that you are comfortable with and you know their markup will not drive you out of business would be supplied with jet fuel. The third resolution is that in the mid-to-long term, in fact right now, you will begin the process of application for your own license for you to be able to import your own jet fuel, to assist you in your business. Also to the benevolence of the CBN governor that six million litres are available now at N480.
“You will get allocation for the next three months through the companies you have nominated. In the process of application for license, midstream should as much as possible grant waivers that would not touch on the security and safety of the process. Committee chairmen on aviation and downstream should follow up,” Gbajabiamila told AON.
Experts proffer solutions
Former Managing Director of Aero Contractors, Capt. Ado Sanusi, while speaking on Channels Television, kicked against bailout for the airline operators, saying this will lead to control of the sector by the federal government, which he said is not healthy for the aviation sector.
He however said that all domestic airlines were suffering and may go under very soon if the government refuse to step in urgently but that the federal government must go beyond pacifying the airline operators to continue operation, adding that it must design policies that will allow them to operate profitably.
“The FG should bring policies that will bring about a better operating environment for the airlines, especially the foreign exchange should be made available to the airlines. Stability of the price of Jet A1 should be made. It is very simple to do that. There are so many ways you can get the stability of Jet A1 price. The easiest is for the federal government to bring the [Jet A1] cargo in and this is not going to be forever. When the federal government brings the cargo in, they allocate it to the marketers to sell only to domestic airlines. The moment we start refining the product in Nigeria, there would be the stability of the pricing. And when there is the stability of pricing, the cost to the airlines are known,” he said.
But the Chief Operating Officer of TAL, an nonscheduled operator, Femi Adeniji, told Daily Sun that the government should immediately come up with relief for the airlines.
He said: “There was N22 billion that was approved as palliative for the airlines during covid that was not released, so, the Federal Government should not give them the cash directly, but that money should be released and used for jet fuel subsidy. For each gallon the marketers sell to the airline, a certain percentage should be subsidised.
“Crude oil price has increased and NNPC has made more money now that the Ukrainian war is on, so they should be able to subsidise jet fuel. Sales tax should also be reduced. Also, the importation of all commercial aviation needs should be duty free and landing and passenger charges should be reduced.”