The House of Representatives (Reps) called on the Nigerian National Petroleum Corporation (NNPC) to make available six million litres of aviation fuel to marketers chosen by the airline operators.
This move is a part of the resolutions reached after a meeting with the Airline Operators of Nigeria (AON) and other stakeholders on Monday.
BizWatch Nigeria recalls that the Airline Operators of Nigeria (AON) announced on Friday plans to shut down operations from Monday over the high cost of aviation fuel.
AON complained that aviation fuel, also known as Jet A1, has reached an all-time high of ₦700 per litre.
Direct Purchase
Allen Onyema, the vice-president of AON, said the scarcity can be addressed if airliners are allowed to purchase aviation fuel directly.
“We were told here at that last meeting that fuel would be sold to us at ₦500 which we protested that it was still on the high side because even when fuel was selling at ₦200 or ₦250, the operating cost was about 40 per cent,” he said.
“It rose to ₦400 and ₦450, and that was when we were alarmed, and you noticed that everybody tweaked his inventory when we now raised our base fare to about ₦50,000, which did not address the matter.
“We were invited to the house, and when we came here, it was reached that they would give us fuel at ₦500 within three days. That never happened. We continued writing, and nothing happened.
“Much later, we were invited by the midstream and downstream authority and we were told that the president approved 25,000 metric tonnes for us as a palliative to help us. We were very grateful to the president. We were happy. We were told to nominate marketers that would market this product for us.
“We were told to have a meeting with these marketers. We called all the marketers and held a meeting with them. We decided the logistics, so they would take their logistical costs and everything, and at the end of the day that fuel was getting to them, they told us at ₦335, so we put everything together, and it would be getting to less than ₦400 for the cost, and we said even if they sell to us at ₦450 it would be okay.
“We were told that a week later that is when the consignment would be arriving in Nigeria and when this happened, the next we got to hear from the marketers was that they had already been given the consignment that we were all jostling for. So we waited thinking that they would sell as agreed. They never.”
Onyema said the matter was reported to Mele Kyari, group managing director of the Nigerian National Petroleum Company (NNPC) Limited, but no action was taken.
“I called the MD of NNPC in the presence of our members. He replied, saying there was no way there would leave us to get direct products that was dangerous,” he said.
“With due respect, Mr Speaker, we were not striking. We did not intend to go on a strike. It was not a strike. What AON was saying on Friday when we released our communique was that we do not have the money anymore to pay.”
Aviation fuel can not have a fixed price – Mele Kyari
The roup managing director of the Nigerian National Petroleum Company (NNPC) Limited, Mele Kyari said aviation fuel cannot have a fixed price because it is a deregulated product.
“So you cannot hold unto any price and indeed what you have seen in the media is ₦700 reference point. It cannot be a reference point. It depends on the market condition. It can be higher than ₦700 depending on the market. This market shifts. As we speak, it is closely related to the price of crude oil,” he said.
“It is our role to ensure we intervene. We did. We brought in products so that we can dampen the price. In March and April, we brought in cargo and made it available to the entire industry at ₦460. There is a build-up to that price.
“When the customer takes marine at ₦435, he has to transport, he has to the charter vessel, bring it to his depot, to his fuel station and transport it. So there cannot be two same price in Lagos and Maiduguri.
“We cannot fix the price. We cannot ask for ₦500. We cannot say it must be below ₦600 or ₦700.“
CBN has no control over the flow of the dollar – Emefiele
Godwin Emefiele, governor of the Central Bank of Nigeria (CBN), said the apex bank has no control over the flow of the dollar.
“We do not have FX to sell. It would be difficult for us to grant any concession. It means we would be taking a hit or we would be providing some sort of subsidy for the industry,” he said.
Effect of shutting down aviation
The speaker of the house or reps, Femi Gbajabiamila said shutting airline operations could cripple the government.
“We are at the precipice today in Nigeria. It is a crucial moment for us. There is a crisis at hand. The shutdown of airline operations has the potential of shutting down this government. We cannot sit here as stakeholders and fold our arms and watch this happen,” he said.
“I hope that the outcome of this meeting will usher in a lasting solution to these challenges of Jet A1 bearing in mind that there is a laissez-faire economy of demand and supply,” he said.
