Jet A1: Airlines, marketers agree on N500/litre for 3 days

Airline operators, aviation fuel marketers, the Nigeria National Petroleum Company (NNPC) Ltd and other stakeholders have agreed on an interim price of N500 for aviation fuel (Jet A1). The price is to run for three days pending the determination of a substantive price. Fuel scarcity: Chaos as multiple flights are rescheduled at Lagos airport Aviation […]

Airline operators, aviation fuel marketers, the Nigeria National Petroleum Company (NNPC) Ltd and other stakeholders have agreed on an interim price of N500 for aviation fuel (Jet A1).

The price is to run for three days pending the determination of a substantive price.

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This was disclosed by the Group Managing Director (GMD), NNPC Ltd, Mele Kyari at the end of the resumed stakeholders meeting on the high cost and non-availability of aviation fuel (Jet A1) in the country on Monday.

He said after consultations between stakeholders, they agreed to fix the price for N500 per litre for three days after which a substantive price would be fixed.

He said: “So, what we have engaged with Major Oil Marketers Association of Nigeria  (MOMAN), Depot and Petroleum Marketers Association of Nigeria (DAPMAN) and the airline operators is that in three days’ time, their representatives will sit down and agree on a transparent base for pricing. That means that they ought to have a referenced benchmark that is quoted transparently in the market.

“They will have a referenced exchange rate for the Naira so that anyone can compete. They will also agree on a premium, which currently differs from Customer to Customer, depending on the volume you buy and the credit level. These are the things they can negotiate in three days and close so that going forward, there is a transparent decision on pricing.

“We have seen where some people are selling at N445 and some are selling at N630. This will completely bring close such that you will not see these differences.

“We also agreed that in the interim, between now and the three days that have to close negotiations, (the lowest price we have seen as at this morning was N445 and a high of N605.

“There is a trader that is selling at N630 and we don’t think this is normal and so, we discounted it, we agreed that they will sell at N500 in the next three days and after that, they will switch to the new price that everyone can assess”.

He further informed that the airline operators would be given licences to import vacation fuel as requested by the chairman of Air Peace.

He added: “Lastly, as requested by the Airline Operators Association of Nigeria, they will be granted a licence by the authority to import petroleum products, particularly ATK so that they can have a way of benchmarking the sales of other customers and can also bring in cheaper products whenever it is possible”.

Operators say least ticket will cost  N120,000 for economy seat

On his part, the Chairman, Air Peace, Allen Onyeama said, although it was not what they expected, they have agreed to experiment with the price for three days while negotiations between stakeholders last.

He however disclosed that they would have loved to have the price as low as N200 per litre, but they will keep to the agreement on the tentative price.

Onyema disclosed that the cost of airline tickets would still be on the high side until everything is resolved.

He said: “From what is happening, sir, if it continues this way, the least ticket will be about N120,000 for the economy seats and we don’t want to do that.

“We want to inform the house that we are demanding that we should be given licences to import this fuel. If we can buy jets that cost hundreds of billions of dollars, we can afford to import this fuel.

“The legislators fought for the Customs waivers on imported aircraft, aircraft spares and for the airlines to have sustainable operations. So, we owe you huge gratitude, together with the resident of this country who signed it into law.

“We thank the GMD for wading into this. Even though at N500, our unit cost per seat will now be about N85,000 barely insurance and other things. That is our pain. I wish we could buy this fuel at N200 so that Nigerians can afford to buy it.

“That is our predicament and so, the public should understand if there is a shift in what they are paying now and what they are going to pay later. Anybody can calculate it just as it has been done here, to buy 8000 litres of fuels at N500 per litre. How much will that give you for just one hour flight”.

On their part, the marketers said, there are various market forces at work when it comes to the pricing of aviation fuel.

Olumide Adeosun who spoke on behalf of the marketers said aviation fuel is the most volatile when it comes to pricing adding that, the marketers have been recording losses because of the way the price variations are done by suppliers.

He said: “We are grateful for your intervention. The last thing any marketer wants is to create a saturation where the general public has to pay far beyond what they can afford for any product.

In his closing remark, the Deputy Speaker, Ahmed Idris Wase, pleaded with the stakeholders to resolve the issue and reduce the suffering of aviation passengers in the country.

He said they would present their interim report on the floor of the House on Tuesday (Today).

Passengers  stranded as  product price hits an all-time high of N600/litre in Lagos

As aviation stakeholders seek solutions to the aviation fuel scarcity and the skyrocketing prices, the product hit an all-time high of N600 per litre in Lagos on Monday.

This is just as many morning flights were scheduled yesterday leaving hundreds of passengers stranded at various airports across the country.

There was chaos at the Murtala Muhammad Airport Lagos domestic terminals as virtually all the airlines rescheduled their flights.

Though the price has been selling for N600 outside Lagos especially in the Northern parts of Nigeria while it was around N575-N579 last week, this was the first time it would hit N600 since the scarcity and price hike started.

Air Peace, Dana Air, Ibom Air, Arik Air, Azman, Max Air, among others have some of their morning flights rescheduled.

An operator said, “We really need to do something about it drastically. I just left the National Assembly but the truth is we can never break even buying fuel at N500 per litre, which was what was agreed upon. How we want to cope, I can’t say except we further increase the prices of tickets because if we must continue to operate, something definitely must give in.”

Daily Trust reports that Nigeria is the only oil-producing nation where aviation fuel is very expensive.

As at yesterday, aviation fuel in most countries including Ghana, United Arab Emirates, India, among others is less than N400 per litre.