Aviation

Scarcity hits local airlines as marketers divert aviation fuel to foreign carriers

Oil marketers have said the bulk of the aviation fuel in their stock is on reserve for foreign airlines, saying there is a need to abide by the contractual supply agreement signed with the international carriers.

They spoke against the backdrop of the aviation fuel scarcity currently affecting domestic airline operators which have told their customers to prepare for imminent flight disruptions.

According to the Airline Operators of Nigeria, the umbrella body for local airlines, the lingering aviation fuel scarcity is negatively impacting local airline operators.

In a statement, they said, “The AON wishes to alert the public of impending disruptions to scheduled flight operations of members of the association. This development is being forced on members by the growing scarcity of aviation fuel popular as Jet-Al.

“The scarcity is impacting negatively on the seamless conduct of air transport operations and would lead to flight rescheduling, and, or cancellations.

“However, the association and its members are working very hard, and in alliance with product marketers, government, and relevant stakeholders, to ensure availability and proper pricing of aviation fuel in the country.”

According to the Executive Secretary, Major Oil Marketers of Nigeria, Clement Isong, oil marketers may not be able to help local operators as they already have contracts with international airlines.

He added that local airline operators only patronise their members when it is convenient.

He said, “We have contract customers who are international airlines. These people sign business agreements with us over some years.

“So, if I have a contract that allows me to recover my costs, I will do all it takes to keep products in my tank for such an airline. But local airlines don’t sign contracts with us. They come to us only whenever it is convenient for them. So, in times of scarcity like this, even if he offers me N1000 per litre, and I have a contract for maybe N500 per liter.

“I will still not sell to local airlines because I have to satisfy my regular customers who keep me in business all year round. So, those who have products are reserving them for their loyal customers and not ad hoc customers.”

According to Isong, foreign airlines pay for their product in dollars and do not owe money. He stated that the current scarcity of aviation is global, and other African countries are struggling as well.

He said, “Most of the ATK in the world is being refined in Russia, and you know the country is currently at war and can’t refine. So that is why the price is currently high.”

He added that foreign airlines base their calculations on PLATTS plus Premium and margins which is good for the oil marketers.

The National Operations Controller, the Independent Petroleum Marketers Association of Nigeria, Mike Osatuyi, said the reason for the present hike in the price of aviation fuel includes supply shortage, an increase in crude oil prices, and a high dollar exchange rate to naira at the black market.

He said, “One thing is that aviation fuel is not regulated so, the landing costs, crude price, and black market exchange rate is being decided by the international market. The government does not subsidise aviation fuel.

“Supply is the problem. No supply and you know that if the aviation sector shuts down then, the whole country will be down.”

According to Osatuyi, the price of aviation fuel is different depending on the transportation cost of taking the product to a different state.

According to findings, the product was sold in Lagos on Monday at N598 per litre, N642 in Kano, N640 in Kaduna, N627 in Abuja, N635 in Enugu and Anambra and N628 in Port Harcourt.

The Minister of Aviation, Hadi Sirika, who spoke at the ongoing seventh Africa-Indian Ocean Aviation Week in Abuja, attributed the high cost and scarcity of Jet A1 in Nigeria to the high demand for crude oil, and the ongoing Russian-Ukraine war.

Sirika said, “There is huge demand, and the population of the world is increasing. There is a huge demand for these products.

“It is not peculiar to Nigeria. It is worse in other countries in terms of pricing and availability. So, it is something we have to live with, and I am sure they understand that.”

In the past few weeks, domestic airlines have complained about the spike in the price of aviation fuel and had threatened to withdraw their services.

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