Marketers stop jet fuel sale to airlines over debts

  • Adopt cash and carry policy, more flight disruptions expected
  • Three carriers undergo safety audits, five more for probe
  • No preferential treatment for national carrier-NCAA

The incessant delay by airlines and the stranding of passengers across many airports in the country have been attributed to the stoppage of the supply of fuel jets to airlines because of huge outstanding debts owed to fuel suppliers.

It is not clear how much the airlines owe the marketers, a source very close to the marketers said the debts are in the region of N1 billion.

The marketers are said to have adopted the pay-as-you-go system; a system that allows them to receive cash from the operators before dispensing fuel into their aircraft as the commodity is said to be available in Lagos and Abuja but scarce in other airports.

 

NCAA DG, Capt. Musa Nuhu

The Director-General of the Nigerian Civil Aviation Authority (NCAA), Capt. Musa Nuhu in his state of the aviation industry address at the Murtala Muhammed Airport, Lagos said, “Some of the airlines have outstanding debts and the oil marketers want cash from them. As a result of that, they have to go and look for money. That is what has caused most of the delays and flight cancellations you are seeing. I agree that Jet A1 is expensive and scarce in some places”.

Nuhu noted with concern the rising cost of Jet A1; a component that he said is critical to the aviation industry, adding that the country does not refine aviation fuel in the country, attributing the skyrocketing price of the commodity to the Russia-Ukraine conflict, coupled with Forex scarcity that has hampered the importation of jet fuel.

Not a few believe that scarcity of the commodity across the globe has been attributed to the shifting of the refining of aviation fuel to other products which led to little demand during the pandemic.

There was little demand for Jet A1 during the pandemic obviously because the value of activities by airlines had reduced. It was not easy to switch back to the refining of crude for aviation fuel overnight.

They noted there was the need to see a return to refining capacity to stave off the serious impact of the shortage and high costs on the airlines.

Speaking on the suspension of Dana Air and the voluntary suspension of Aero Contractors operations by the management of the airline, Nuhu said the decision to ground Dana over safety issues was done to forestall accidents.

Jet A1

He noted that the aviation regulatory body concluded plans to audit all the scheduled carriers operating in the country, adding that the agency had already concluded with three remaining six others.

His words, “We have conducted economic and financial audits on Aero Contractors. When Aero Contractors management came to us, they told us that they planned to suspend their operations voluntarily. We are not here to kill any airline as we commend Aero Contractors for trying to restructure and re-organise the airline. We did a technical audit with Aero Contractors and they had no issue with us but had financial issues. They are reorganizing. We are fully supporting all airlines and other ancillary services. We commend Aero Contractors for that”.

“For Dana Airlines, they underwent an economic audit and it was not good. We saw a series of violations that were of great concern to us. The audits are ongoing; we have not concluded. I participated in the meetings and discussions on Dana. We are still talking with Dana. When we are done, we will give you the report. For now, they will remain grounded until they resolve their issues”.

He however empathized with the precarious situation of the indigenous carriers which had been bogged down by skyrocketing jet fuel, inability to access foreign exchange, high cost of aircraft maintenance offshore, and the harsh operating environment.

He further stated that many of the operators had invested heavily into the airline business and expected returns but lamented that they are not seeing the return on investment, hinting, “I would rather shut them down than allow them to continue to operate dangerously”.

The NCAA chief expressed sadness over the continued seizure of over $450 million of foreign airlines’ funds, saying that repatriation of foreign carriers’ funds is enshrined in the Bilateral Air Services Agreement (BASA) Nigeria has with all the airlines.

He promised that the matter will be urgently resolved as the Minister of Aviation, Hadi Sirika and the Central Bank of Nigeria (CBN) are working hard to hand the airlines their funds.

“We have been there before and the Minister helped to resolve it. I think it was $600 million then and it was resolved. I want to say that the Minister of Aviation is working tirelessly to resolve the issue”.

Foreign carriers are taking drastic steps to cut capacity on the lucrative Nigerian routes following the withholding of their $450 million revenue.

The International Air Transport Association (IATA) has described as unacceptable the withholding of international airlines’ funds to $450 million. The amount is more than four other African nations put together.

On the planned national airline, Nigeria Air, Nuhu declared that the regulatory agency would not give the upcoming airline, any special treatment over other airlines seeking operational components from it.

Asked how far the carrier had gone in its efforts to obtain the all-important Air Operators Certificate (AOC) needed to launch it to commercial operations, he disclosed that the airline had begun the process of getting the AOC.

His words,” There will be no preferential treatment for Nigeria Air. The airline team has obtained its Air Traffic License having gone through all the requirements. It’s in the process of getting its AOC, if it satisfies all the requirements put on the ground by the NCAA, we will approve it for the airline in line with the same procedures binding on other airlines”.

Wole Shadare

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