Aviation fuel: FG reaches agreement with airline operators

The Nigeria National Petroleum Corporation (NNPC) Limited, Central Bank of Nigeria (CBN) and airline operators have agreed to provide six million litres of aviation fuel at N480 a litre for three months.

It was part of the agreements reached at the end of the meeting summoned by the House of Representatives on Monday to avert airline operators’ planned shutdown.

On Friday, the Airline Operators of Nigeria (AON) announced plans to shut down operations from Monday over the high cost of aviation fuel.

The group complained that aviation fuel, also known as Jet A1, has reached an all-time high of N700 per litre.

Femi Gbajabiamila, speaker of the house, announced the resolutions after about four hours of the meeting.

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Gbajabiamila said the Central Bank of Nigeria (CBN) has agreed to provide the aviation fuel at N480 — in what seems like a forex subsidy — pending when the carriers would be granted license to import the commodity.

“In the long term, you commence the process of applying for your own licence to be able to import your own jet fuel. So that it will be removed, whether it is middlemen or frontmen or whatever. You will know the landing cost to assist you in your business,” he said.

“There is the benevolence of the CBN governor that six million litres are available now at N480. You will get an allocation in the next three months through the companies (marketers) that you have nominated so that you would not come back and say jet fuel is now a certain amount and it is the fault of the NNPC. You have nominated those people that are selling to you.”

While appreciating all the stakeholders for the efforts put in at resolving the issue at stake, he thanked the airline operators for being nationalistic in calling off the strike.

Speaking at the meeting, Allen Onyema, vice-president of AON, said the scarcity can be addressed if airliners are allowed to purchase aviation fuel directly.

“We were told here at that 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,” he said.

“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.”

Speaking at the meeting, Kyari said aviation fuel cannot have a fixed price because it is a deregulated product.

“So you cannot hold onto 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,” he said.

On his part, Godwin Emefiele, governor of the Central Bank of Nigeria (CBN), said the apex bank has no control over the flow of the dollar.

“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,” he said.