By Adeniyi Onifade
The unending scarcity of aviation fuel in the country is causing ripples in the industry and also hurting activities of the sector.
This has led to interventions by the National Assembly which summoned airline operators, oil marketers, Nigerian National Petroleum Company (NNPC) Limited and the Central Bank of Nigeria (CBN) to find lasting solution to the high cost of jet fuel which the operators threatened to shut down local air transport services.
Air travel by all standards is regarded as the only means of safe travel for Nigerian elites that want to avoid rail and road terror attacks and kidnappers.
Background
Aviation fuel, also known as Jet-A1, accounts for between 30 to 40 per cent of operating costs in the sector.
As a deregulated arm that is exclusively controlled by suppliers, the price has consistently fluctuated along with Naira to Dollar exchange rate.
Airlines in the country had woken up overnight in March and jerked up the base airfare by 66 per cent, scaling up the minimum ticket fare from about N30,000 to N50,000. ‘Today’s flight’ economy tickets sold for an average of N80,000 on one-way, and its round-trip variant was offered for about N130,000.
Major marketers, however, said that the “harsh economic realities and attendant high cost of fuel” was due to global challenges and not peculiar to airline operators.
In their defence, Chairman of Major Oil Marketers Association of Nigeria (MOMAN), Olumide Adeosun, denied selling at such exorbitant rate alleged by the airlines.
Adeosun explained that the verifiable prices in West Africa range from $1.25 per litre in Ghana to as high as $1.51 per litre in Liberia.
“Due to the intervention of NNPC over the last several weeks, aviation fuel is landed into marine terminal tanks in Nigeria at between N480 and N500 per litre, depending on the logistics efficiency of the operator. Due to high costs of specific handling of Jet-A1 (special transport and continuous filtration), the product is sold on the tarmac at Ikeja (our benchmark), between N540 and N550 per litre and across other airports at between N570 and N580 per litre.
“In comparative terms, the aviation industry is already benefiting from government’s intervention when local prices are compared to West African regional prices, despite the deregulated status of aviation fuel. This situation is hardly sustainable given the already humongous N4 trillion cost of the PMS subsidy,” Adeosun said.
Implications
The high price of Aviation fuel is already taking a deep toll on Nigeria’s economy.
Inflation had surged to 16.8 per cent in April, majorly driven by fuel price increases and accelerating costs for food, including bread and cereals, according to data from Nigeria’s National Bureau of Statistics (NBS).
Annual food inflation rose to 18.4 per cent from 17.2 per cent in March, sending the headline rate to 16.8 per cent, the highest in eight months, according to the apex statistics body in the country
The jump in fuel and food items costs is said to be driven by global supply disruptions following Russia’s invasion of Ukraine
In another development, Airline Operators of Nigeria (AON) has also alerted members of the flying public that there would be flight disruptions across the country following the persistent scarcity of aviation fuel known as Jet A1.
Spokesman for the AON, Prof. Obiora Okonkwo, in a notice, said there would be disruptions to scheduled flight operations of members of the association.
“This development is being forced on members by the growing scarcity of aviation fuel popularly kown as JetA1.
“The scarcity is impacting negatively on seamless conduct of air transport operations and would lead to flight rescheduling and/or, cancellations,” it added.
Therefore, industry players say unless critical steps are taken to address the situation, the Aviation sector is heading for crisis.