The Nigerin National Petroleum Corporation (NNPC) has insisted that it will not fix price for aviation fuel but asked airline operators to request for import license for the fuel.
This was disclosed by the Corporation’s Group Managing Director, Mele Kyari in a statement issued by the House of Representatives after they met AON, GMD of the NNPC and Governor of the Central Bank of Nigeria (CBN) on Monday.
According to him, aviation fuel cannot have a fixed price because it is a deregulated product.
What NNPC is saying about fuel
He said, “So you cannot hold unto any price and indeed what you have seen in the media is N700 reference point. It cannot be a reference point. It depends on the market condition. It can be higher than N700 depending on the market. This market shifts. As we speak, it is closely related to the price of crude oil.
“It is our role to ensure we intervene. We did. We brought in products so that we can dampen the price. In March and April, we brought in cargo and made it available to the entire industry at N460.
“There is a build-up to that price. When the customer takes marine at N435, he has to transport to the charter vessel, bring it to his depot, to his fuel station and transport it. So there cannot be two same prices in Lagos and Maiduguri.”
According to the statement, the airline operators are expected to commence the process of securing a license for the importation of aviation fuel to avoid suspicion over the landing cost of the product and other associated logistic issues.
What the Reps are saying about Jet A1
Femi Gbajabiamila, the speaker of the House, said shutting airline operations could cripple the government.
He said, “We are at the precipice today in Nigeria. It is a crucial moment for us. There is a crisis at hand. The shutdown of airline operations has the potential of shutting down this government. We cannot sit here as stakeholders and fold our arms and watch this happen.
“I hope that the outcome of this meeting will usher in a lasting solution to these challenges of Jet A1 bearing in mind that there is a laissez-faire economy of demand and supply.
“As part of the resolutions, it was also agreed that, as a long-term solution, the airline operators must commence, the process of securing a license for the importation of aviation fuel to avoid suspicion over the landing cost of the product and other associated logistic issues.”
Airline operators speak…
Allen Onyema, vice-president of AON, explained that the scarcity can be addressed if airliners are allowed to purchase aviation fuel directly.
- He said, “We were told here at the last meeting that fuel would be sold to us at N500 which we protested that it was still on the high side because even when fuel was selling at N200 or N250, the operating cost was about 40 per cent.
- “It rose to N400 and N450, and that was when we were alarmed, and you noticed that everybody tweaked his inventory when we now raised our base fare to about N50,000, which did not address the matter.
- “We were invited to the house, and when we came here, it was reached that they would give us fuel at N500 within three days. That never happened. We continued writing, and nothing happened.
- “Much later, we were invited by the midstream and downstream authority and we were told that the president approved 25,000 metric tonnes for us as a palliative to help us. We were very grateful to the president. We were happy. We were told to nominate marketers that would market this product for us.
- “We were told to have a meeting with these marketers. We called all the marketers and held a meeting with them. We decided the logistics, so they would take their logistical costs and everything, and at the end of the day that fuel was getting to them, they told us at N335, so we put everything together, and it would be getting to less than N400 for the cost, and we said even if they sell to us at N450 it would be okay.
- “We were told that a week later that is when the consignment would be arriving in Nigeria and when this happened, the next we got to hear from the marketers was that they had already been given the consignment that we were all jostling for. So we waited thinking that they would sell as agreed. They never.”
- Onyema added that the matter was reported to Mele Kyari, Group Managing Director of the Nigerian National Petroleum Company (NNPC) Limited, but no action was taken.
- “I called the MD of NNPC in the presence of our members. He replied, saying there was no way they would leave us to get direct products that that was dangerous.
- “With due respect, Mr Speaker, we were not striking. We did not intend to go on a strike. It was not a strike. What AON was saying on Friday when we released our communique was that we do not have the money anymore to pay,” he said.
Godwin Emefiele, Governor of the Central Bank of Nigeria (CBN), said the apex bank has no control over the flow of the dollar.
He said, “We do not have FX to sell. It would be difficult for us to grant any concession. It means we would be taking a hit or we would be providing some sort of subsidy for the industry.”
- In its resolution, the House enjoined the NNPC and the CBN to provide the required assistance and declared that airline operators should name fuel marketers of their choice to supply them with aviation fuel over the next three months.
- The House also enjoined marketers to begin the process of applying for licences to import aviation fuel without intervention by middlemen.
- It ruled that the six million litres of aviation fuel available should be sold at N480 per litre to the operators.