BusinessDay

Fuel price hike: Aviation industry may soon shut down, says NCAA

..we can't survive like this for another three days - operators

Musa Nuhu, the Director General, Nigeria Civil Aviation Authority (NCAA), on Thursday said the agency will be left with no alternative than to shut down the aviation industry if the price of fuel keeps skyrocketing.

Nuhu spoke at the meeting of stakeholders in the aviation and oil industry with the House of Representatives to find a solution to the aviation price hike.

He lamented that the price of the commodity increases by the day in the wake of its scarcity and it is a threat to the safety of lives of air travellers as the airlines are over stretched.

“Over the last couple of weeks, we have seen a significant rise in the cost of aviation fuel to about 670 per liter. What this has done is that it has increased the cost of airline operations from about 30 % to 50 % for me, as a regulatory authority, this is of significant concern in terms of the inconveniences on the travelling public in terms of flight cancellations, delays and there are issues of significant safety concerns.

“It’s either we shut it down because we cannot generate enough revenues to operate safely. I’m not only talking about cancellations, I’m talking about safety of flight operations. it is the responsibility of the NCAA to ensure safety of the airspace and I’m responsible for it. God forbid, I don’t want to come before this committee to explain why A or B happened,” Nuhu said.

On his part, Ogbugo Ukoha, Executive Director at the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), Ogbugo Ukoha said there was enough aviation fuel to last the country for 34 days.

Read also: Ondo women farmers lament insecurity, fuel scarcity

Ukoha said that aviation fuel was one of the petroleum products that has been fully deregulated and is controlled by market forces adding that the Authority has issued licenses to about 28 companies to import the product into the country.

He said: “I can also confirm to you that from our records, we have sufficient supplies. As of today, we have 34 days supply on ground. That means even if nothing comes in, what we have ordinarily would be enough to serve us for the next 34 days plus. All we can say is that there is enough fuel on the ground.”

His submission infuriated Ahmed Idris Wase, Deputy Speaker of the House and other lawmakers who questioned why there should be scarcity of the product if there was enough supply to last for 34 days.

Wase said: “You have sufficient supplies then, what is the reason for the scarcity; who is responsible for the scarcity. Shouldn’t it be of concern to you as a regulator? As a regulator it should be of concern to you.

“This is a political era and elections are coming. We do not want anybody to sabotage the efforts that the government has put into revamping the economy so far because aviation is very important to the economy”.

Mele Kyari, Group Managing Director of the Nigerian National Petroleum Company (NNPC) Limited, said the demand by operators that the fuel price should be reduced to at least N200 per litre is not feasible as the company has no control over it because that is what the international price dictates.

Mele Kyari however, assured Nigerians that the company will work with relevant authority to ensure that the ongoing crisis in the aviation sector is resolved.

He said: “The airline operators must also have the right commercial arrangement with their support petroleum products particularly Aviation Turbine Kerosene (ATK). There’s a frenzy in the market today, no one knows what the price will be tomorrow.

“That’s still not an excuse for escalation of prices, we will work with relevant authority to ensure that if there’s any such thing we will deal with it jointly as an industry. We will work together to ensure that this is resolved.

“It’s impossible to bring the price of the petroleum to N200 per litre because today the landing cost of ATK is N480, the price we have no control of, that’s what the international price says. The only way you can do this is to subsidize this, all the same we will do everything possible to bring down these prices.”

Allen Onyema, Chairman of Air Peace, who spoke on behalf of the Airline Operators appealed to the NNPC to ensure that the price of aviation fuel is brought to N200 per litre, saying they “cannot survive like this for another three days.”

Onyema said the operators have held back from shutting down the industry because of the impact it will have on the nation and its economy.

He said, “We are asking that the NNPC should ensure that in the coming days they bring down aviation fuel to N200 per litre. That’s the only time we will be able to operate safely and ensure some running of the scheduled operations in this country. I don’t know how they will do it but they should, it will be good because even at N200 it’s a lot for the airlines. Not N400 or any other higher price, as we are talking now it will soon hit N700 and possibly N1000.

“What happened in the last two weeks is alarming. From a price of N190 per litre two weeks ago, the price is now N670 as at today and we don’t know what it is going to matter. The government has done so much for us in this industry with the President granting us waivers. We held a meeting and decided to shut down our operations because of the cost of operation. We are owing so much money and we don’t want AMCON to come after us. But we decided not to because we know the impact it will have on the economy.

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