SHORTAGES OF AVIATION FUEL

The scarcity of Jet A1 is stifling the aviation industry in Nigeria

For almost one year, airlines operating in Nigeria have been facing difficulties obtaining aviation fuel, known as Jet A1, at the right price and in the quantity demanded. The hardest hit are the domestic carriers that do not have the choice of flying across to other countries and can stop at neighbouring Abidjan in Ivory Coast, Accra in Ghana or Yaoundé in Cameroon to obtain the product at the right price. For an oil producing country, this is yet another emblem of shame.

Due to the unfortunate situation, airlines operating in or from Nigeria have become notorious for delayed and cancelled flights. This has also led to so much uncertainty since a passenger going to the airport is not sure whether he would travel or not because the airline might cancel the flight due to aviation fuel scarcity.

These cancellations and delays have also led to unruly behaviour among passengers after waiting for several hours. The airlines have lost huge revenues due to inadequate supply of the product. It has also lowered the passenger traffic on the domestic routes and threatens the sustainability of Nigerian carriers.

Although oil marketers have attributed the scarcity and high price of the product to the exchange rate of the naira, we do not believe that is a plausible excuse. Long before the naira fell to about N365 to the dollar, the price of the product was already high while marketers never met airlines’ demand. Indeed, some airline operators had in the past accused the marketers of forming a cartel, which subdued competition in the Jet A1 market as they colluded to jointly import the product and sell at arbitrary prices.

The allegation has always been that by jointly importing the product, the marketers were always bringing into the country less aviation fuel than the actual volume needed, thus creating artificial scarcity which obviously kept the price high. Nigerian airlines need an average of 1.6 million litres of fuel a day, while international carriers and private jet operators require about 800,000 litres a day, but less than that volume was always imported. Essentially, marketers have kept the price of the product high by making it scarce.

In defending themselves, oil marketers argued that there were additional costs incurred in bringing aviation fuel to the country, including port charges and sometimes demurrage costs. They also accused the government of not fulfilling its promise of making foreign exchange available to them at rates lower than the official exchange rate.

But the feeling within the industry is that the price the marketers sell the product is almost 50 per cent higher than the actual price after deducting all expenses. For example, about two weeks ago, Ghana reduced the price of aviation fuel by 20 per cent, selling it at N110 per litre. In Nigeria, the same product sells at N200 per litre and more.

It is unacceptable that an oil producing country like Nigeria is selling the product at a price higher than what obtains in other African countries. In fact, at different aviation fora, it has been said that the price of aviation fuel in Nigeria is the highest in a country that is not at war. Yet by its location and the passenger traffic, Lagos should naturally be the aviation hub in West and Central Africa. But Nigeria is losing this to Ghana because of the high price of aviation fuel, poor infrastructure and exorbitant charges imposed by government agencies. That, we insist, is not acceptable.