Airline Operators in Nigeria on Monday warned that they have only three days left to shut down operations over lingering scarcity of aviation fuel.
In their presentation, Airline Operators of Nigeria (AON) threatened that they had only three days to shut down operations over lack of aviation fuel.
Represented by the Chief Executive Officer of Airpeace, Mr. Allen Onyema, they expressed concern over the high cost of aviation fuel.
This was as the stakeholders in the aviation sector agreed to peg the price of the aviation fuel at N500 per litre.
The Group Managing Director of the Nigerian National Petroleum Company (NNPC), Mr. Mele Kyari announced the decision at the meeting of the stakeholders with the special committee of the House of Representatives investigating the circumstances surrounding the recent hike in the price of aviation fuel chaired by the Deputy Speaker, Hon. Idris Wase.
The resolution to peg the price at N500 per litre would be experimented for only three days from today and within the period the Association of Airline Operators and the major oil marketers are to engage themselves and work out modalities that would lead to the permanent reduction of the price of aviation fuel in the country.
Kyari, however disclosed that at the moment there were 19 oil companies with 88 million litres of aviation fuel in the country.
The NNPC boss explained: “We know this is a very difficult situation. We know that once aviation fuel increases, prices of flight ticket will certainly increase and this can surely cost pain for Nigerians. That is why we are working with you to ensure that those pains are minimised to the barest minimum and one of the elements is the pricing of aviation fuel.
“So, what we have engaged with MOMAN, DAPMAN and the airline operators is that in three days’ time, their representatives will sit down and agree on a transparent base for pricing.
“That means that they ought to have a referenced benchmark that is quoted transparently in the market. They will have a referenced exchange rate for the naira so that anyone can compete.
“They will also agree on a premium which currently differs from customer-to-customer, depending on the volume you buy and the credit level.”
Kyari added: “These are the things they can negotiate in three days and close, so that going forward, there is a transparent decision on pricing. This will no doubt throw up the actual value of the product in the market.
“You will no longer see these discrepancies we have seen where some people are selling at N445 and some are selling at N630. This will completely bring close such that you will not see these differences.
“We also agreed that in the interim, between now and three days they have to close negotiations, the lowest price we have seen this morning was N445 and the highest was N605.
“There is a trader that is selling at N630 and we don’t think this is normal and so, we discounted it.”
Speaking further, the NNPC GMD said it was, “agreed that we sell at N500 in the next three days and after that, they will switch to the new price that everyone can assess.”
According to him, as requested by the Airline Operators Association of Nigeria, “they would be granted license by the authority to import petroleum products, particularly ATK so that they can have a way of benchmarking the sales of other customers and can also bring in cheaper products whenever it is possible.”
Continuing, the operators through Onyema requested for licencing of its members for the importation of Aviation Fuel to end the perennial hike in the price and scarcity of ATK.
They maintained that they have the competence to import the required ATK for their operations without any hitches.
According to them, “We can afford to import this fuel, let NNPC give us the licence and we will no longer complain. I have the mandate of every airline in this country to announce to you that if they can’t come down from their rooftops, we have only three more days to be able to fly. “We are not threatening this country. We have been subsiding what we have been doing. The rate as at today is N630, N640 and N605. We have an aircraft going to Kano, it has about 7000 liters of fuel in it, multiple it, sir by N630. The unit cost per seat is about N70000 per seat. You have not talked about insurance that is very static. Nigerians pay heavy insurance premium because this country is stigmatised.
“You have to insure abroad. It is a must because all the insurance companies in Nigeria put together cannot even pay for one aircraft. So, you have to go abroad to insure. “Yet the fuel cost which is supposed to be about 30 to 40 per cent in every clime, in Nigeria it about 70 per cent even before time. So, you can now see the mortality rate of airlines in this country.
“From what is happening, if it continues this way, the least ticket will be about N120 for economy and we don’t want to do that. We want to inform the house that we are demanding that we should be given licence to import this fuel. If we can buy jets that cost hundreds of billions of dollars, we can afford to import this fuel.”
Responding to the resolutions read by the NNPC GMD, Onyeama said the implication of the N500 per litre benchmark for three days was that the ticket for airfare would be N85,000 per seat on economy.
They however expressed gratitude to the House of Representatives and the NNPC for standing by the operators.
The Chairman of the Committee and Deputy Speaker, Wase faulted the presentation made by the Chief Executive, Nigerian Midstream and Downstream Regulatory Authority, Ahmed Farouk, who was represented by an Executive Director, Ogbogu Ukoha who insisted that prices had been discounted.
Wase had asked the regulatory body the current price of the product and why it was so exorbitant but was referred to the marketers who however sidestepped the questions and could not give specific answers.
He thereafter warned NMDPRA against blackmailing the government.