Nigeria loses N110 billion, 500m litres aviation fuel annually to Benin, Ghana

• Why aviation fuel price could rise again-Airline chief
• CITA partners PUMA to bridge supply gap

Except aviation fuel marketers improve on their aviation fuel supply chain, the aviation industry would continue to fail in meeting up with over 1 billion litre of Jet A1 needed for the sector annually.

At N220 per litre cost, half of that, 500 million litres demands could not be met last year. Consequently, the sector loses over N110 billion to neighbouring Lome, Benin and Accra, Ghana as Nigeria can only supply 500 million litres of fuel to airlines, while the other 500 million litres are sourced by airlines in these two countries annually occasioned by scarcity and high cost of the commodity in Nigeria.

Aside that, the International Civil Aviation Organisation (ICAO), the global aviation regulatory body has also projected that Nigeria will need two billion litres of jet A1 annually by 2030 occasioned by rise in passenger public.

Because of scarcity that had dodged the sector, most foreign, domestic and cargo airlines fly across the borders to buy, coupled with reduction in price of Jet A1 outside the shores of the country.

The General Manager/Chief Operating Officer of CITA Group, a major aviation fuel marketing/supply firm, Mr. Betiku Olasimbo made the disclosure during the launch of CITA/PUMA partnership. The partnership would see CITA expand its operations and services in the whole of Africa and to bridge the gap in supply chain.

Olasimbo further clarified that the potentials of the Nigerian market is up to 1billion litres of fuel annually, adding that the alliance with PUMA is going to be a game changer in the environment that would engender a healthy competition and also bring security of supply.

His words, “By 2017, we were just having or able to lift 50 per cent of the capacity. What we are taking a look at here is that we are an enterprise and we cannot say we are going to be contributing, no because it is based on the forces of demand and supply but at the same time, how efficient our service is.

“Once we are able to solve the supply problem, I am confident the market will grow. It means we are solving problems and creating economic potentials that is going to bring about some market advantage”.

 “Most airlines tank up in Lome, Accra, and yet, Lagos is second largest airport in Africa which is supposed to present itself as a very strong hub both for passenger traffic and also for cargo. Most of the big players in cargo are coming to Lagos but you will not believe it. After they discharge their cargoes, they move here to Ghana to tank their fuel”, he lamented.

This is coming as there are indications that aviation fuel could rise by between ten and 20 per cent in the country because of the rise in price of crude oil.

A managing director of one of the domestic airlines who spoke to New Telegraph on condition of anonymity said presently, Jet A1 between N207 and N220 in Lagos depending on the marketer, stressing that it cost between N110 and N125 in places like Kano, Port-Harcourt, Abuja, and Kaduna.

The airline chief further disclosed that the price might be up to an all-time high of between N250 and N270 per liter.

Aviation fuel costs more in Nigeria and other oil producing countries than their counterparts that do not produce oil.

Ghana used to have the highest aviation fuel in Africa until the government cut the cost by 20 per cent two years ago.

For instance, in Nigeria, despite the stability in the lifting of aviation fuel across the country and the deregulation of the commodity, JET A1 has hit an all-time high of N220 per litre.

The skyrocketing price of JETA1 in Nigeria has added more to the pains of airlines, which use 30 per cent of their revenues for fuelling aircraft.

Aviation fuel is central to the operations of an airline, as it constitutes between 35-40 per cent of an airline’s cost. The price of the commodity – laden with taxes – in the West African sub-region, is the highest in Africa.

While the specialised fuel is sold for about $2.30 cents per gallon in Nigeria, $2.30 in Benin and $1.94 cents per gallon in Cameroon, it is sold for close to $3.14 cents in Ghana until the government caused reduction in the price of the commodity. In Luanda, Angola (also an oil producing country), it costs $3.75 per gallon; Libreville $2.05 per gallon; Khartoum, Sudan $2.44 per gallon.

It is only Equatorial Guinea that sells JET A1 for $0.46. Jet fuel prices in some African capitals are double the global average and it is posing a threat to its aviation sector development.

The high cost of jet fuel in Africa compared to other regions due to distribution inefficiencies and infrastructure constraints, has held back the development of airlines and fare reduction.

Apart from the issues of highly priced jet fuel, Africa’s jet fuel shortfall is expected to triple from 1.8 million mt in 2013 to around 5.2 million mt by 2025. As a result of the high fuel price, ticket prices are relatively high. If the fuel price comes down and costs of operations reduce, airlines are likely to bring down their fares.

Today, fuel prices globally average per 1.3 dollar. In Africa, it ranges between $2 and $3.77. In some places, more than twice what it is globally.

Vice-President for Africa, International Air Transport Association (IATA), Raphael Kuuchi, said on the average, they notice that fuel price is 21 per cent more expensive in Africa than the world average. “In addition to that, we brought these taxes together. Africa is not a rich continent and we ask, why must we be paying the most? If you look at the high fuel taxes in Africa, the victims are actually oil producers.”

He lamented that in most of the oil producing countries; aviation fuel is mostly expensive, adding that it is baffling.

Wole Shadare