Aviation fuel: Airline operators meet Reps’ leadership

To buy product at N480 per litre
Abuja—Airline Operators of Nigeria, AON, yesterday reached a truce with the leadership of the House of Representatives and other government agencies to cancel the plan of shutting down flight operations in the country.
It will be recalled that the operators last Friday, announced plan to stop flight operations due to the high of cost aviation fuel that had risen to N700 per litre.
The development prompted the leadership of the House to intervene in the matter, with a view to finding a solution to the problem.
At the meeting attended by the operators, the Group Managing Director of the Nigerian National Petroleum Company, NNPC, Mele Kyari, the governor of Central Bank of Nigeria CBN, Godwin Emefiele, and the operators agreed to cancel the planned suspension.
The meeting, chaired by speaker of the House, Femi Gbajabiamila, resolved that the government would make available six million liters of fuel.
Reading the resolutions of the meeting that lasted for about four hours, Gbajabiamila also urged the operator to begin the process of getting their own license to import the product.
He said: “That we move the language of suspension to canceled. That the issues of shut down has been canceled, based on this meeting.
“NNPC and airline operators have both agreed that in the interim of three months, marketers of choice that you are comfortable with and that you know their mark up will not drive you out of business, would be supplied with jet fuel. We talked about N550 or something like that.
“The third resolution is that at the mid to long term, in fact right now, you will begin the process of application for your own license to be able to import your own jet fuel. To assist you in your business.
“Also tie to the benevolence of the CBN governor that six million litres are available now at N480. You will get allocation for the next three months through the companies you have nominated.
“In the process of application for license, midstream should as much as possible grant waivers that would not touch on the security and safety of the process. Committee chairmen on aviation and downstream should follow up.”
Earlier in his remarks, the speaker said their intervention was necessary to stop the economy from bleeding.
“We are at the precipice today in Nigeria. It is a crucial moment for us. There is a crisis at hand. Shut down 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. We need to address this matter once and for all,” he said.
Speaking on behalf of the airline operators, the Managing Director of Air Peace, Allen Onyema, spoke of their frustrations so far.
“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 and worldwide, it is like that.
“It rose to N400 and 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 actually address the matter.”
”That was when it was N400. 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 authorities 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. It was not free. 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. We 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 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 did.
In his presentation, NNPC GMD, Mele Kyari, said it was difficult to have a fixed price of the product
“We agreed that we make the marketers sell the product to them at N500 for three days pending the day they would sit down and agree on this pricing formula. I confirm that between us the and the downstream authority they had sat down and engaged and agreed on a pricing structure.
“Needless to say there is no fixed price. This is a deregulated product. 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 higher than N700 depending on the market. This markets shifts. As we speak it is closely related to the price of crude oil.
“There is no way the oil matters, I am speaking for them now, if you own me N1 billion. I would not give you credit. No one would do this. There are limits to credits. It is an understanding customers
“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 N435, he has to transport, he has to charter vessel, bring it to his depot, to his furl station and transport it. So there cannot be two same price in Lagos and Maiduguri.
“We cannot fix price. We cannot ask for N500. we cannot say it must be below N600 or N700. That is why we insisted they go and have a formula that is transparent that each one of us can see.
“The only way we can have fixed price is if we put subsidy on. You can say it can sell for N500 in any circumstance, then somebody has paid for that difference. I am not sure this is what we are doing. “There is an FX constraint. There is limit to what the CBN can provide. We are constrained because we are not able to produce dollar because of teh dearth of oil in the Nigera Delta. This is then reality. So we do not have. That means customers must source for FX from alternative sources”, he said.
Similarly, the CBN governor, Emefiele who responded to the an earlier concern of the operators of not accessing foreign exchange, said there was one to sell, adding that it was only when the NNPC exported products that it could get foreign exchange.
“The availability of FX is very important and the issue of constraint from FX arising from issues bordering on theft in the Niger Delta is a big issue. It is when NNPC is able to export that dollars can come in.
“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.

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