By Nathaniel Zaccheaus
The Federal Government, airline operators, and oil marketers, on Monday, resolved the aviation fuel crisis in the country by settling for N500 per liter of the commodity.
It is currently being sold at N670. The tentative tripartite, agreement of N500 would continue, pending the determination of a regulated price for the fuel.
The agreement was reached by the parties at the House of Representatives,
The green chamber decided to intervene in the crisis over Jet-A1 (also known as aviation fuel) through an investigative hearing.
The Airline Operators of Nigeria said with the current price of N670 per liter, a seat in the Economy Class should go for about N120,000.
They threatened to suspend flight operations in the next three days (by Thursday) as the airlines could no longer continue to subsidize flights.
The threat forced the Deputy Speaker of the House, Ahmed Wase; Group Managing Director, Nigerian National Petroleum Company Limited, Melee Kyari; Chairman of Air Peace and Vice-President of the AON, Allen Onyeama; Chairman, Major Oil Marketers Association of Nigeria, Olumide Adeosun; and Chairman, Depot and Petroleum Marketers Association of Nigeria, among others, to hold an emergency meeting-within-meeting.
After the meeting, Wase asked the NNPC boss to read the resolution reached by the stakeholders.
Kyari said, “We know this is a very difficult situation. We know that once aviation fuel increases, prices of flight tickets will certainly increase and this can surely cost pairs for Nigerians.
“That is why we are working with you to ensure that those pains are minimized to the barest minimum. And one of the elements is the pricing of aviation fuel.
“So, what we have engaged with MOMAN, DAPMAN and the airline operators is that in three days, 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 everyone 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.
” This will no doubt throw up the actual value of the product in the market.
“You will no longer see these discrepancies we have seen where some people are selling at 445 and some are selling at N630.
“This will completely bring close such that you will not see these differences.”
The GMD of NNPC also disclosed that the meeting agreed that in the interim, to sell at N500 in the next three days and after that, they would switch to the new price that everyone could assess.
Kyari noted that the lowest price seen as of Monday morning was N445 while some marketers sold the commodity for as high as N630 “and we don’t think this is normal and so, we discounted it.”
He said, “Lastly, as requested by the Airline Operators of Nigeria, they will be granted a license by thee 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.”
The AON leader Onyeama adopted the resolutions on behalf of the operators.
He noted that at N500 per liter, “our unit cost per seat will now be about N85,000, barely insurance and other things; that is our pain.”
He said, “I wish we could buy this fuel at N200 so that Nigerians can afford to buy it.
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“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 liters of fuel at N500 per litre liter. How much will that give you for just a one-hour flight?”
The MOMAN leader, Adeosun stated that “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.”
He said, “The resolution that we reached today is attainable and we look forward to working with our colleagues in the aviation sector so that we can have an efficient sector for Nigerians.”
Earlier, MOMAN urged the Federal Government to issue licenses to modular refineries, saying they can end aviation fuel shortage and price fluctuation.
The marketers also blamed the hike in price on forex scarcity and exchange rates, urging the Central Bank of Nigeria to subsidize the rates for Jet-A1 importation.
Adeosun said, “That is the market adjusting to a steep drop in market conditions that are outside of the Nigerian market. There are some very easy things that we can discuss there. Do you know that there are refineries in Nigeria today that produce ATK? Do you know why we cannot sell that ATK?
“We cannot sell that ATK today because they are not licensed and they have to be licensed. Every modular refinery that produces diesel produces ATK. But they cannot sell today because the refineries are not certified. And the ATK that is produced in Nigeria must be priced in Nigeria.”
However, AON, through Onyeama, condemned the marketers for refusing to disclose the actual amount they buy aviation fuel per liter.
Onyeama said, “I have the mandate of every airline in this country to announce to you that if they cannot come down from their rooftop, we have only three more days to be able to fly. We are not threatening this country. We have been subsidizing what we are doing.
“I will give you the rate as of today, (at) N630, N640, N650 (per liter). We have an aircraft going to Kano that has about 7000 liters of fuel on it. Multiply it by 630. The unit cost per seat already is about N70,000 per seat. You have not talked about the very static insurance and Nigerians pay a lot of insurance premiums because this country is stigmatized.”
He added, “You have to insure in London and other places abroad. It is a loss. All the insurance companies in Nigeria put together cannot even insure one aircraft. So, you have to go abroad to insure and they slam us with heavy premiums. What we use in ensuring one plane is what the legacy airlines of this world use in insuring about three planes. So, the Nigerian airline is dead on arrival.
“Yet, the fuel cost which was supposed to be about 30 to 40 percent (of operational costs) in every other clime in the world, in Nigeria it is about 70 percent even before this time (of scarcity). So, you can now see the mortality rate of airlines in this country and the causes.”
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The Air Peace boss challenged the marketers to disclose the actual price of aviation fuel, saying, “They have refused to answer your simple question.
“Whether you got money from the CBN or from the black market, how much is the unit cost of your acquisition so that we know if the airlines are cheating you or you are cheating the airlines, or if you have formed a cartel to increase your prices overnight.”
Onyeama stated, “From what is happening if we continue this way, the last ticket you will expect from airlines will be about N120,000 for Economy (Class). And we don’t want to do that because it will not help the ordinary man.
“I have the mandate of airways to inform the House that we are now demanding that we should be given a license to import this fuel. If we can buy jets that cost about $80m, we can afford to import this fuel. Let NNPC give us the right to import fuel and we will not complain to you.”
