…NNPC, CBN say they are helpless over the price of Aviation Fuel
Temporary relief may have come the way of Airline Operators as the House of Representatives on Monday secured the cooperation of the Nigerian National Petroleum Corporation (NNPC) to make available six million litres of JetA1 (aviation fuel) to aviation fuel marketers chosen by the Airlines Operators of Nigeria (AON).
Some oil marketers have however stated that the issue at hand is global and not domestic, as such, the airline operators should find a more creative way of addressing the situation and forget about the idea of getting subsidies for Aviation fuel from the government.
Finding an immediate solution to the problem at hand, was that at the end of the emergency meeting held between stakeholders in the aviation, Oil marketing and the banking industries with the National Assembly, was able to temporarily secure six million litres of aviation fuel for the operators.
Specifically, those who attended the meeting are stakeholders from the Federal Ministry of Petroleum Resources, Ministry of Aviation, Central Bank of Nigeria (CBN), NNPC, Midstream and Downstream Petroleum Regulatory Authority, the Nigerian Civil Aviation Authority (NCAA), Nigerian Airspace Management Authority (NAMA), among others.
The aviation operators had intended to shut down operations on Monday, but were prevailed upon by the Federal Government to think of the implications of their actions.
The mean issue behind their intended action is the rising cost of aviation fuel.
Some of the resolutions agreed upon at the meeting include, that the airline operators must commence, as soon as possible, 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.
The Midstream and Downstream Petroleum Regulatory Authority were also mandated to, as much as possible, grant waivers that do not touch on the security and safety of the country for importers of the products.
Femi Gbajabiamila, Speaker of the House of Representatives, in his remarks at the beginning of the meeting, said the nation was at a crucial moment as the shutdown by the airline operators amounts to a potential shutting down of the country. “We cannot sit here and watch this happen.
The Speaker recalled that certain resolutions that included the sale of aviation fuel at N500 per litre and the granting of aviation fuel import license to the operators were arrived at during the last meeting with the stakeholders while requesting an update on the implementation of the resolution.
The leadership of the House also inquired from the NNPC about the status of the 25,000 tons of ATK approved for the airlines as a palliative in addition to the availability of the product to the airlines for about three months.
Also, the leadership opined that functional refineries should be able to address some of the challenges being faced while asking for the status of the refineries undergoing renovation.
In his response, Mele Kyari, group managing director of the Nigerian National Petroleum Company (NNPC) said that the three months supply of Jet A1 to the chosen marketers by the AOAN is assured while emphasizing that the price of the product cannot be guaranteed because it is globally market-driven.
“We will make appropriate allocations to the three marketers chosen by the operators and the other,” Kyari said.
Godwin Emefiele, Governor of Central Bank of Nigeria (CBN) said that though the apex bank has no control over the flow of the dollar, he however assured that no operator would be denied facilities by the banks as long as they are creditworthy.
While appreciating all the stakeholders for the efforts put in at resolving the issue at stake, the Speaker said, “Rounding up on a positive note, I appreciate the airline operators for being nationalistic in calling off the strike as 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”.
Also reacting to this development, a downstream operator in the oil and gas industry empathized with the airline operators but said that he was amazed at how one business’s lack of operational planning and business resilience can become another sector’s palaver.
“Also incredulous is how owners of businesses can threaten to shut down their own businesses. The issue at hand is global. Marketers are not exploiting the global shortage of fuels. The reality is that international traders are selling to the highest bidders and we as Nigerians because we have failed to put our house in order, are woefully exposed. This shouldn’t be the case and there is a lot to be learned by all parties from these unfortunate events of the last week. The market is difficult for me everyone, he said.
Another operators told Business Standards that the group managing director of NNPC brokered the initial truce after marketers had been accused of arbitrary price increases by AON, but he also warned that the adopted pricing format, which is very transparent and accessible to all, does not guarantee price reduction but will allow AON access to pricing mechanism of marketers.
“AON is, technically, asking for subsidy on Jet-A fuel and the Deputy Speaker, who chaired the meetings, stated categorically that Government will not subsidise the product.”
“What is being witnessed now is the interplay of marketer factors, rising /high international crude oil price and Forex rate to which is added the local freight (already impacted by high diesel cost) and the marketer’s premium. Only the last component, at the marketer’s discretion, can be discounted.”
Olusola Bello