11th March, 2022
By Femi Ogunshola
Airline operators in Nigeria said the price of aviation fuel jumped from N190 to N670 within two weeks, thus phenomenally increasing operational cost.
They suspect that the supply chain of the fuel called Jet A1 has been hijacked by speculators to drive up the price through artificial scarcity.
The operators also expressed worry over the safety of airlines in Nigeria, adding that they were disturbed in the face of continuous hike in the price of aviation fuel.
The operators said this during a hearing by the House of Representatives adhoc committee investigating the scarcity of aviation fuel.
They said that operators were struggling to maintain their jets as fuel now took over 115 per cent of operation costs.
Mr Allen Onyema, the CEO of Air Peace, said airlines would have shut down operations if not for the political season and to support the current administration that had been supportive of the sector.
He said that the operators could not survive the next 72 hours because they were indebted and risked takeover by the Asset Management Corporation of Nigeria (AMCON).
Mr Ugbugo Ukoha, Executive Director, Distribution System for Storage and Retailing Infrastructure in the Nigeria Midstream and Downstream Regulatory Authority however, claimed that the country had excess supply.
According to him, Nigeria has excess supply of Aviation Turbine Kerosene (ATK).
He said that the country has 34 days of fuel supply, hence, the report of scarcity is false.
Onyema, while responding to the presentation by Ukoha, said he was surprised with the claim that fuel was in abundance.
He said that operators had been sourcing the fuel from marketers at an exorbitant price.
“To say that I am saddened by certain responses is playing it down. The product is not available, I am surprised that he, Ukoha, is saying there is sufficiency that will last for 34 days.
He urged the House to intervene to make the price of ATK sell for a maximum of N200 per litre.
Rep. Idris Wase, the Deputy Speaker of the House of Reps who chaired the hearing, berated Ukoha, accusing him of being used to blackmail the government in a political season.
He warned that no one would blackmail the government.
“As a politician, I want to tell you that I am concerned, we are moving into an election period, nobody should blackmail our government,” he said.
He noted that the surge in price was sequel to hoarding by marketers and negligence of the regulatory authorities to do their work.
Wase also blamed the Executive Vice Chairman of the Federal Competition and Consumer Protection Commission (FCCPC), Babatunde Irukera, for not monitoring the activities of the ATK marketers.
The Director-General of the Nigerian Civil Aviation Authority, Musa Nuhu, said the hike in the cost of jet fuel made the NCAA consider grounding some airlines from operating to avoid air mishaps.
Mr Mele Kyari, Group Managing Director, Nigerian National Petroleum Corporation (NNPC) said the request by the operators to reduce the price of ATK to N200 per litre would not be possible.
He said that the current landing price of the product is above N400 per litre.
He said a price reduction to N200 will only be possible if the country wished to start paying subsidy on the product.
The committee however, urged Ukoha to provide the committee with the list of all licensed marketers to meet with the committee on March 14.