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Major oil marketers under the aegis of the Oil Marketers Association of Nigeria (MOMAN) said the skyrocketing price of aviation fuel like other petroleum products is a result of the fact that the commodity used in Nigeria is not produced in the country and is subject to international price movements which are currently suffering the twin shock of increased post-pandemic demand and the ongoing sanctions against Russia, a large producer of petroleum products.
MOMAN in a statement by its chairman, Olumide Adeosun said the shocks had seen international trading premiums, costs of vessel freight and other transport costs skyrocket to worrying levels.
He however noted that separately, international traders are exploiting the situation by selling only to the highest bidders.
Adeosun noted that with respect to aviation fuel, verifiable prices in West Africa range from $1.25 per litre in Ghana to as high as $1.51 per litre in Liberia, adding that even then, “The product remains scarce across the sub-region”.
He explained that due to the intervention of the Nigerian National Petroleum Corporation (NNPC) over the last several weeks, aviation fuel is landed into marine terminal tanks in Nigeria at between N480 and N500 per litre depending on the logistics efficiency of the operator.
He further stated that due to the high costs of specific handling of Jet A1(special transport and continuous filtration), the product is sold on the tarmac at Ikeja with their benchmark between N540 and N550 per litre and across other airports at between N570 and N530 per litre.
He reiterated that during this period of NNPC intervention, as the NNPC uses the nominal Central Bank of Nigeria (CBN) exchange rate, no independent importer would import aviation fuel as it is unable to access foreign exchange at the same rate, leaving NNPC as the major importer of aviation fuel for now, even though the product is deregulated.
His words, ‘In comparative terms, the aviation industry is already benefitting from government’s intervention when local prices are compared to West African regional prices, despite the deregulated status of aviation fuel. The situation is hardly sustainable given the already humongous N4 trillion cost of PMS subsidy”.
These interventions according to Adeosun are sometimes necessary to mitigate shock and help the economy, operating environment and the public to adjust to the new realities while efforts he noted were being made and innovations introduced to optimize costs and increase efficiencies.
“These interventions cannot however be permanent in nature. It is our hope that the war in Ukraine comes to a speedy conclusion and the integration of products from the local refineries into the supply chain (Dangote, NNPC and modular refineries) will mitigate the high costs being borne by the government and Nigerians”.
To him, a return to cost recovery and free market and competitive economics including access to foreign exchange at competitive rates is inevitable for the sustainability of the production and distribution framework in the petroleum downstream industry, adding that there is an immediate need to prepare the operating environment and indeed the larger economy for the eventual return.
The oil marketers empathise with all users of petroleum products; airline operators, private vehicle owners, logistics and transport companies, manufacturers, cooking gas users and all members of the public who are affected by the worldwide petroleum products price increases which impact logistics, transportation, distribution and operation costs.
The MOMAN boss clarified that the escalating fuel price cycle is not country-specific, but a global issueGoogle+