Dependency on importation and weak Naira-to-Dollar exchange rate
seems to be taking on the blame for the spike in aviation fuel, currently pegged at N315/litre.
Fuel marketers, yesterday, said except the local charges and fees which are fixed, fluctuations in the global price of crude oil and the exchange rate would continue to affect the price of fuel, until there is an effective effort to refine the product locally.
Findings showed that the essential commodity lately sold for N315 per litre at airports in Northern parts of the country and above N220 in the South. The rate is an upward review from N215 and N300/per litre in the Southern and Northern airports, about a month ago.
An average of 50% surge in fuel cost, a critical component of airlines’ operation, has also forced airfares to increase with an average Economy Class ticket on less than an hour flight selling for over N65, 000.
General Manager, TotalEnergies Nigeria, Rabiu Abdulmutalib, said spikes would continue to be the narrative until the local challenges are resolved.
Abdulmutalib said the inability of local refineries to distill the product for local consumption, coupled with high investment in logistics and high cost of aviation fuel handling equipment like refuellers, hydrant dispenser/servicers and filtration systems have all spiked the product in Nigeria, comparatively higher than in some non-oil producing African countries.
He spoke about proper coordination among relevant government agencies in monitoring and enforcing all standards along the supply chain.
Some of the agencies he mentioned included the Department of Petroleum Resources, the Federal Airports Authority of Nigeria (FAAN), Nigerian Civil Aviation Authority (NCAA), Standards Organisation of Nigeria (SON) and the Nigeria Union of Petroleum and Natural Gas Workers (NUPENG). He also appealed for the government’s intervention on easy access to foreign exchange for importers.
Indeed, aviation fuel is the oxygen of airline business. Though an oil producing nation and sixth largest producer in the world, Nigeria’s perennial inability to refine the product locally has made jet fuel susceptible to dictates of exchange rate, and therefore expensive, accounting for between 30 to 40 per cent of airlines’ operating cost.
Chief Executive Officer of Skypower Express Airways, Capt. Mohammed Joji, said it was unfortunate that the sector still imports aviation fuel 100 per cent.
Joji said aviation fuel is just refined kerosene and should not continue to elude local production.
“It is sad and unbelievable that a country with three refineries cannot refine Jet A1 for local use. Someone must be sabotaging the system; otherwise, we have no business importing fuel. The refineries are strategically located. Kaduna refinery takes care of the north, while Warri takes care of the south.
“As it is, you cannot travel from Maiduguri to Lagos by road anymore. So, you need to fly and you need fuel. We only need to refine the product locally and make it cheap, and about 40 per cent of the cost will be reduced,” Joji said.