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March 24, 2022

The Aviation Fuel Scarcity

There is need for a quick intervention

For the past two weeks, airlines operating in Nigeria have faced difficulty in obtaining aviation fuel, known as Jet A1, at the right price and in the quantity demanded. The hardest hit are domestic carriers. On Monday, members of the Airline Operators of Nigeria (AON) said they had only three more days to fly because of the rising cost as well as scarcity of aviation fuel. For an oil producing country, this is another emblem of shame that should task the authorities.

According to the AON, from N190 per litre in January this year, oil marketers increased the price of the product to N300 per litre and by 9th February 2022, it rose to N405 per litre. Since then the price has been increasing within hours, such that within three days last week it rose from N450 to N519, N615 and N670. Industry stakeholders believe that a quick intervention is necessary. Besides influencing the cost of air ticket, the high price of aviation fuel has implication on safety because in the bid to recoup cost, airlines may be tempted to toy with the extension of maintenance dates. Everything should be done to avert that.

Perhaps more worrisome is that since the rapid increase in the cost of aviation fuel, major oil marketers like Sahara Energy, Oando, Conoil, MRS and others have stopped stocking the product. There are allegations that these companies may be hoarding the product. In their place, new companies with no known antecedents in the industry have sprung up to sell the product to the airlines. Apparently encouraged by the Nigerian National Petroleum Company (NNPC), these middlemen have hijacked the sale of aviation fuel. This is dangerous.

Meanwhile, air transport plays critical role in the economy of any nation. When aviation is paralysed, it affects every other sector of the economy. The airlines have lost huge revenues due to inadequate supply of the product and this has lowered the passenger traffic on domestic routes and threatens the sustainability of Nigerian carriers. In recent weeks, airlines operating in or from Nigeria have become notorious for delayed and cancelled flights. This has also led to so much uncertainty for passengers and the operators themselves. Increasingly, air transportation is being threatened in the country and the authorities must intervene quickly.

By its location and passenger traffic, Lagos should naturally be the aviation hub in West and Central Africa. But Nigeria is losing this to Accra, Ghana because of high price of aviation fuel, poor infrastructure, and exorbitant charges by government agencies. That, we insist, cannot be acceptable. 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 scarcity has always been created around the product, although it was never this bad.

As things stand, the only way the price of aviation fuel and other petroleum products can be determined by market forces in Nigeria is if the country refines the products locally. The road ahead is tricky. The war between Russia and Ukraine may mar the import of refined petroleum products and non-availability of most of the vessels that ship the product to Nigeria will hike the price. Also, with the increase in the price of crude oil, cost of refined petroleum products is likely to soar beyond the reach of many Nigerians. The consequence is that when airlines can no longer afford the cost of aviation fuel, they will ground their operations. That would be catastrophic for the national economy. The federal government must ensure that this does not happen.

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