BusinessDay

Airlines’ fuel imports plan stalled, NNPC intervenes

...Marketers say fuel sold for N540-550/litre

Airlines’ plans to start importing aviation fuel amid price hikes have been stalled by lack of infrastructure and logistic issues.

Following the requests by airlines, the federal government had a month ago agreed to grant licences to airlines to import aviation fuel as they lamented the prices at which they were buying the fuel from marketers.

The airlines said the price of aviation fuel had risen from N250 per litre to N700 per litre, stressing that this was no longer sustainable and would make many airlines go under.

Allen Onyema, chairman of Air Peace Airlines, said the airline operators made the application to import fuel in the National Assembly with Mele Kyari, managing director of the Nigerian National Petroleum Company (NNPC), present, and the request was granted.

Onyema, however, hinted that the plans by airlines to import fuel could not be immediate because airlines needed time to put together the infrastructures and logistics to make this happen.

“Fuel import is a long-term goal; it is not something immediate. We have to put together the logistics to make this happen. We are going to apply, whether as collective airlines or individual airlines but this is a long-term goal,” he said in an interview with Arise TV.

He, however, disclosed that some weeks ago, the airlines were called for a meeting by the Nigerian midstream and downstream regulator and were told that the president had approved 25,000 metric tonnes of fuel to be given directly to the airlines from Duke Oil, a subsidiary of NNPC.

He said the airlines were asked to nominate the marketers that would lift the product for them and they were promised that the product would arrive in four days.

Onyema alleged that when the time came for the products to be delivered, the authorities involved said the fuel could no longer be delivered to airlines because of some issues.

According to him, airlines are now heavily indebted because of fuel, which constitutes up to 95 percent of operating costs.

He said no airline could survive this in the next three weeks, as airlines had been subsidising costs for passengers in the last three months.

He said when all costs are included, passengers would need to pay nothing less than N150,000 for an hour flight ticket for airlines to break even.

BusinessDay’s findings show that not all airlines are open to collecting licences for the importation of fuel.

George Uriesi, chief operating officer of Ibom Air, said Ibom Air was not involved in the suggestion. “We don’t have any idea who might want to do it,” Uriesi added.

The Major Oil Marketers Association of Nigeria (MOMAN), on Monday, debunked airlines’ claim that aviation fuel was being sold at N700 per litre in some parts of the country.

“I am saying that it is not true that the price of aviation fuel is N700 per litre,” Clement Isong, executive secretary of MOMAN, said.

Isong said the NNPC had intervened, bringing in aviation turbine kerosene (ATK) and delivering to marketers at about N500 per litre.

According to him, the product is sold for between N540 and N550 per litre at the Murtala Mohammed Airport (local).

He said: “Nobody with common sense will go and bring in aviation fuel now that NNPC is bringing in products and selling it cheap. NNPC is bringing in the product because it is swapping it with crude and when it swaps it with crude it uses the Central Bank of Nigeria exchange rate of N419 to a dollar.

“Meanwhile, the product is deregulated. So no normal person can go and get at that exchange rate. You cannot use N589 (black market rate) to a dollar to bring in the product and be selling at N550 per litre.”

According to him, the intervention by the NNPC has discouraged marketers from importing aviation fuel because it will be a bad business decision.

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Isong said: “ATK, as a product, is handled very carefully. It is continuously filtered. It is carried by special trucks, so there are extra handling costs.

“Even with these costs, it is sold at the tarmac between N540 and N550 per litre in Lagos and by the time you carry it all over the country including transportation cost, it will be sold at about N570 or N580 at the farthest airport from Lagos. There is nowhere aviation fuel is sold at N700 per litre.”

He said enquiries made by MOMAN also showed that aviation fuel was cheaper in Nigeria compared to other West African countries.

Isong said: “In Ghana, aviation fuel is sold at Platt, North Western Europe, plus premium or minus at $1.25 per litre. In Liberia and Sierra Leone, it is selling at $5.70 per gallon, which translates to $1.51 per litre. So those are your West African prices.

“Now if you want to translate that to naira, if you are using the NNPC price which is N540, that is cheaper and even if you use the N700 they are claiming, it is still cheaper. We are not selling it at N700 per litre because of the NNPC intervention. It is actually about 90 cents per litre with the NNPC price.”

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