Airline operators, regulators, oil marketers peg aviation fuel at N500/ litre in 3 days

Airline operators, the Nigeria Downstream and Midstream Petroleum Regulatory Authority (NDMPRA), the National Petroleum Company (NNPC) Limited and oil marketers on Monday resolved that aviation fuel be sold at
N500 per litre in the next three days.

This is just as the airline operators insisted that the economy class ticket fare within the period and the benchmark price will be N85,000 per seat.

The resolutions were sequel to an intra-meeting of the stakeholders after initial disagreement while appearing before the House of Representatives Special ad-hoc Committee investigating the scarcity and high cost of aviation fuel.

According to the agreement, the airline operators and the major oil marketers would meet within the period of three days and work out modalities that would lead to the permanent reduction of the aviation fuel prices, presently sold for more than N600 per litre.

Mele Kyari, NNPC Chief Executive Officer who disclosed the decisions of stakeholders said as requested by the Airline Operators Association of Nigeria, they will be granted license by the regulatory authority to import petroleum products.

He 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 major oil marketers, depot and petroleum marketers 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.

Read also: Aviation fuel: NNPC, others set to operate transparent basis of pricing

“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.

“We also agreed that in the interim, between now and the three days that we have to close negotiations, (the lowest price we have seen 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 the will sell at N500 in the next three days and after that, they will switch to the new price that everyone can assess.

“Lastly, as requested by the Airline Operators Association of Nigeria, they will be granted license 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”.

Earlier at the meeting, the airline’s operators said they have only three days left to shutdown their operations over the skyrocketing cost and acute scarcity of aviation fuel.

Allen Onyema, Chief Executive Officer of Airpeace who spoke on behalf of the operators demanded that they should be given license to import aviation fuel, saying if they must continue flying, an average Nigerian will spend N120, 000 for an economy air ticket.

He said: “I have the mandate of every airline in this country to announce to you that if they can’t come down from their rooftops, we have only three more days to be able to fly. We are not threatening this country. We have been subsiding what we have been doing.

“The rate as at today is N630, N640 and N605. We have an aircraft going to Kano, it has about 7000 liters of fuel in it, multiplied by N630. The unit cost per seat is about N70000 per seat. You have not talked about insurance that is very static. Nigerians pay heavy insurance premiums because this country is stigmatized.”

“Even 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,” Onyema added while responding to the Kyari.

In their presentation, the oil markers represented by Olumide Adeosun said the high dollar rate was responsible for the high cost of the fuel, refusing to tell lawmakers the landing cost which caused commotion.

Ahmed Idris-Wase, Deputy Speaker of the House and Chairman of the Committee disapproved of the presentation of Ogbogu Ukoha
NDMPRA representative that the prices had been discounted.

Wase had asked the regulatory body the current price of the product and why it was so exorbitant but was referred to the marketers who however sidestepped the questions and could not give specific answers.

He said: “As far as I’m concerned, the basic issues that we left to come back today have not been addressed. First is the agreement, your resolution that is the basis to proceed in any meeting and I read out what we resolved the other day and that’s why I’m asking you the questions.

“I specifically asked the other person when he said they sell at a loss. I said what was the unit cost at that time you were selling at a loss so that we will now know. And I said here you are just using semantics and language. Here, I am after facts. We are in fact-finding we are not on language here and I want to insist that please let’s be serious.

“Like I did mention to him, the House can go further, if you want us to go on an expanded investigation we will do that. As far as I’m concerned I am not willing to compromise what is in the interest of our own country.”