That was as Director General of Nigeria Civil Aviation
Authority (NCAA), Musa Shuaibu Nuhu, warned that the aviation industry might
soon be shutdown, saying with the current jet fuel scarcity, it is not safe to
fly anymore.
Kyari gave the assurance while addressing the leadership of
the House of Representatives, who were investigating the sudden scarcity and
high cost of aviation fuel.
At the meeting well attended by members of the House
Committees on Petroleum Downstream and Upstream, Jet A1 marketers, and airline
operators, the NNPC GMD regretted the late intervention, saying all the supply
data showed there was sufficient Aviation Turbine Kerosene (ATK) in the
country.
Given the current situation, Kyari advised airline operators
to have the right commercial arrangement with their support petroleum products,
particularly ATK.
Kyari said, “Why we didn’t act was that all the supply data
we have showed sufficient ATK in the country. This means that it may be in the
wrong hands. There’s frenzy in the market today, no one knows what the price
will be tomorrow.
“That’s still not an excuse for escalation of prices, we
will work with the relevant authority to ensure that if there’s any such thing,
we will deal with it jointly as an industry. We will work together to ensure
that this is resolved.”
Addressing the demand by airline operators and lawmakers
that the fuel price should be reduced to at least N200 per litre, Kyari said it
was not feasible, as they had no control over it. He said the price was
determined internationally price.
He said, “It’s impossible; today the landing cost of ATK is
N480, the price, we have no control on that.”
Responding to concerns raised by the lawmakers regarding the
crisis in the energy sector, despite the passage of the Petroleum Industry Act
(PIA), the NNPC GMD said PIA passage was not a mistake. He said the company
would work with other stakeholders to ensure gaps in the sector are closed.
“Whenever there’s supply gap it is our role to ensure that
supply gap is closed, we will work with the authority and other stakeholders to
ensure that if there’s any gap that’s existing we fill it,” Kyari added
In his presentation, Director General, Nigeria Civil
Aviation Authority (NCAA), Musa Shuaibu Nuhu, warned that they might shutdown aviation
industry soon as it’s not safe to fly anymore.
Nuhu said, “Over the last couple of weeks we have seen a
significant rise in the cost of aviation fuel. One year ago it was selling at
N190 per litre and as of this afternoon it has gone for N670 per litre, what
this has done is that it has increased the cost of operations.
“This is a significant safety concern to us, if airlines
cannot have enough financial margin to comply with all the mandatory
requirement then we really have to look at, God forbid I don’t want to come
before this committee to explain why something happened.
“Every day it increases. I won’t be surprised tomorrow if it
sells for N700 per litre. Considering the ticket price now, the airline
industry cannot survive. The option is we shutdown, because they cannot
generate enough revenues to operate safely.”
Earlier, Chairman of Air Peace, Allen Onyema, who spoke on
behalf of the airline operators appealed to NNPC to ensure that in the coming
days, the price of aviation fuel dropped to N200 per litre.
Onyema said, “That’s the only time we will be able to
operate safely and ensure some running of the schedule operations in this
country. I don’t know how they will do it but they should, it will be good
because even at N200 it’s a lot for the airlines. Not N400 or any other higher
price, as we are talking now it will soon hit N700 and possibly N1000.
“What happened in the last two weeks is alarming. From a
price of N190 per litre two weeks ago, the price is now N670 as at today and we
don’t know what it is going to happen.
“The government has done so much for us in this industry
with the president granting us waivers. We held a meeting and decided to shut
down our operations because of the cost of operation. We are owing so much
money and we don’t want AMCON to come after us.”
Onyema added, “We cannot survive like this for another three
days. We had to reduce our operations to 30 per cent because the product is not
even available. So, I am surprised that the Executive Director said they have
supplies to last 34 days. We are making so much sacrifice here.
“I am evacuating Nigerians from Poland and I had to pay
three times the usual amount and I am not asking for a refund. So, something
needs to be done and done fast.”
On his part, Executive Director, Nigerian Midstream and
Downstream Petroleum Regulatory Authority (NMDPRA), Ogbugo Ukoha, noted the
role of the agency in regulating the industry, and issuing licenses to
importers of the product.
Ukoha said from his records, there was enough aviation fuel
to last the country for 34 days. He also said that aviation fuel was one of the
petroleum products that had been fully deregulated and was, therefore,
controlled by market forces, adding that the authority has issued licenses to
about 28 companies to import the product into the country.
But his explanation did not go down well with Deputy
Speaker, Hon. Idris Wase, and other lawmakers.
Wase questioned why there should be scarcity of the product
if there was enough supply to last for 34 days, alleging that there must be a
cartel working hard to sabotage the efforts of the government.
Former CEO of Aero Contractors, Captain Ado Sanusi, told
THISDAY on Wednesday that due to the scarcity and high cost of aviation fuel,
fuel marketers now gave airlines new conditions for selling the product.
The marketers insisted that airlines must pay before the
product was supplied to them, an aberration in an industry globally known for
payment after purchase of the product.
Sanusi said, “You pay for fuel in advance, which is not done
in the aviation industry. It will make operations very difficult and lead to
more delays and cancellations. You cannot deposit money before you buy fuel.
“If nothing is done urgently, this may lead to the beginning
of airlines going down because they cannot continue operating like this. The
federal government should urgently look for solution to the problem.”
Sanusi said government must intervene by doing away with the
middlemen, but allowing marketers to import the product and sell directly to
the airlines.
He said, “These middle men don’t understand aviation. The
marketers are part of the industry whose operations are approved by the
Nigerian Civil Aviation Authority (NCAA). Ideally, the airlines can buy from
the marketers who will issue them invoice and they pay in 24 to 48 hours.
“This is the way it is done. You cannot even deposit money
with the marketers because if you do, they may not even have the product at the
time you want it because of uncertainty and volatility in the supply of the
product. If care is not taken, Nigerian airlines may go down.”
THISDAY also spoke with Managing Director of Clean Serve
Energy Limited, Chris Ndulue, who explained the challenge the aviation fuel
marketers were facing.
Ndulue stated, “There are three basic things: the cost of
crude oil in the international market and the price of the dollar. We have
failed to refine fuel locally, so we have to import.
The price of crude oil has been rising and the price of
dollar has been rising. Supply of the product has been facing disruptions
because there is war in Europe. There is scarcity because people have not been
producing, so price is rising. We need to start producing refined product here.
“The price of diesel has risen, that it is over N600. We
need to refine crude oil here so that we end these disruptions and high
prices,” Ndulue said.
THISDAY findings show that airlines spend huge operating
fund on purchase of aviation fuel. A Boeing 737 Classic, for instance, consumes
about 2, 300 -2, 500 litres of aviation fuel for one-hour flight. Airbus
A320-200 consumes about 3, 125 litres of aviation fuel or 2,500kg per hour.
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