Oil Marketers, Airlines Confirm Improved Supply of Aviation Fuel as Operators Increase Aircraft Capacity

Chinedu Eze

Oil marketers and airline operators have confirmed the steady supply of aviation fuel, known as Jet A1, since Dangote refinery started supply of the product to local consumers, even though the prices of the product have increased.

It was learnt that the cost of aviation fuel in Lagos is between N1,230 and N1,240 per litre, N1, 265 per litre in Abuja and N1, 290 per litre in Kano, which are higher than the cost of the same product earlier this year at N900 per litre in Lagos.

The CEO of Cleanserve Energy, an oil marketing company, and former Managing Director of Arik Air, Chris Ndulue, told THISDAY that the supply of the product had been more reliable, as it is coming from the Dangote facility, envisaging there will be no future scarcity of the product, except if there are hiccups in crude supply.

According to him, there is no doubt about the high capacity of Dangote Refinery, noting that such local supply has brought sanity in the market, to enhance quality control.

“We are now getting supply from Dangote Refinery. So, there is reliability in the supply and the prices start from N1, 230 in Lagos, but increases due to transportation cost as they move the product to other parts of the country. The Jet A1 is available only in Lagos from where the product is supplied to every part of the country. The Dangote Refinery can supply Jet A1to the whole of West Africa. It is not easy to articulate the size of the refinery projects, despite criticisms.

“I can say that there is improved quality; although the quality is supposed to be the same, but it is easy to maintain a new machine. Supplies from local refinery have also brought sanity to the market because it is easier to enforce quality control now,” he said.

Ndulue also stated that there would be minimal contamination of the product with local supply because when it was being imported it moves from the vessels to primary and secondary depots and other storage system and in the process the product gets contaminated, if not properly handled.

It was learnt that airfares may have come down relatively compared to two months ago when the price was higher.

Available information revealed that tickets could cost as low as N87, 000 in Aero Contractors, if purchased three weeks ahead. Other airlines sell a bit higher than Aero Contractors, which sells the cheapest currently.

“Price of tickets depend on when you buy but I can say that the fares have come down a bit because you can get tickets from N87, 000 to N113, 000 in Aero Contractors and in other airlines you can get from N92, 000 to N126, 000 and in business class, Aero sells from N170, 000 to N190, 000, but other airlines sell higher,” a protocol officer at MMA2, terminal in Lagos told THISDAY.

Checks revealed that some airlines have increased capacity in terms of aircraft acquisition. Airlines such as Ibom Air, Value Jet, Aero Contractors and Air Peace have added more equipment. This, experts said, may have helped to bring down the airfares.

“We have passed the lowest point in terms of capacity. The lowest was in June/July. Some airlines have added more aircraft. Ibom Air added another A220, Aero Contractors added two additional aircraft; so are ValueJet and Air Peace. Hopefully, Ibom Air will add two more aircraft before December,” disclosed senior official of one of the major airlines.

THISDAY gathered that Air Peace would add two additional Boeing B777, four Boeing 737-800 NGbefore December and there has been a boost in their fleet currently. They are also expecting Embraer E175 and E190 in the coming months.

In a recent interview with Aviation Correspondents, the Chief Executive Officer/Founder of CITA Aviation Fuelling Company Limited, Dr. Thomas Ogungbangbe, noted that until the Dangote Refinery started refining aviation fuel, Nigeria has been importing the product, even when the refineries owned by government were working.

“Over the decades, it has been myriads of challenges when it comes to the issue of aviation fuel because incidentally, we have never had a situation in Nigeria where we have a refinery that could make a litre of aviation fuel. So even when the three refineries were working, they were not configured to crack aviation fuel. So over the decades, we have always imported jet fuel and it got to a particular point of getting out the products every six weeks,” he said.

Appraising the sourcing of the product from Dangote facility, he assured that there would continue to be reliability in supply, as long as Dangote has access to crude but insisted that the prices of the products may not come down.

“The refinery on its own may not have any impact, in terms of pricing because the refinery was set up as a profit-making venture. They also buy crude using the global benchmark and they also need to make profit. So we do not anticipate that they are going to be selling at some discounts because there is a world benchmark. Even if they sell way below what it is, which means you are probably promoting the kind of practice that we have gone beyond, where people buy products at a cheap price and they take it out again to other countries to go and sell because it is criminally attractive.

“We will not go through that route again. I do not see a major reduction in pump price coming, but where the pricing advantage will come from based on Dangote Refinery is that if I take a vessel of product from Togo because we don’t have the facility in Nigeria where we can have our big ship to tack and lighten and do some ship to ship transfer. We do all of that in Togo and between Togo and here, just for a vessel, you will spend like one million dollars. And, of course as entrepreneurs, you need to recoup your money. So if you take that off, it is a lot. It’s not only in petroleum products. It is applicable to even other items. If we are able to restore security back to Nigerian waters, even if it it is outbound Lagos, it will go a long way to reducing the unit cost of items. In fact, it may affect aviation fuel by almost N20 a litre,” Ogungbangbe said.

He also dismissed the possibility of modular refineries producing aviation fuel, saying they may not have the critical equipment needed to refine the product.

“Modular refineries cannot make jet fuel because for you to make jet fuel, there are conditions precedent to cracking the crude. Any crude that would be used to produce Jet A1 must have to go through the hydrogen chamber. The hydrostatic process is a very expensive one. And that is what is even lacking in our refineries in Port Harcourt, Kaduna and Warri, which was why they could not produce Jet A1 all these years,” he said.