Airline operators, represented by the Chief Executive Officer, CEO of Air Peace, Mr. Allen Onyema,yesterday said they that they cannot afford the cost of aviation fuel anymore.
This was as the aviation fuel marketers have failed to convince the House of Representatives on why the prices of the product were hitting the rooftops on daily basis. At the moment, the airlines are buying the fuel at N670 from normal price of 190 recently.
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He said that if they were to continue flying, an average Nigerian will spend N120,000 on an economy ticket. He also demanded that the operators be given license to import the fuel to make life easy for Nigerians.
He said: “Mr. Deputy Speaker sir, nobody on this side of the divide has answered your question. You have been asking them one particular question. Everybody is dancing around it. What the deputy speaker wanted to hear is how much did they buy this fuel, per litre. By now, you must have computed it. They are dancing around it and telling you stories. That is what you have been asking, sir. Before they came here, they were supposed to have computed their unit cost.
“I have the mandate of every airline in this country to announce to you that if they can’t come down from their rooftops, we have only three more days to be able to fly. We are not threatening this country. We have been subsiding what we have been doing.
“The rate as at today is N630, N640 and N605. We have an aircraft going to Kano, it has about 7,000 litres of fuel in it, multiply it, sir by N630. The unit cost per seat is about N70,000. You have not talked about insurance that is very static. Nigerians pay heavy insurance premium because this country is stigmatized.
“You have to insure abroad. It is a must because all the insurance companies in Nigeria, put together, cannot even pay for one aircraft. So, you have to go abroad to insure.
“Yet the fuel cost, which is supposed to be about 30 to 40 percent in every clime, in Nigeria it about 70 percent even before this time. So, so you can now see the mortality rate of airlines in this country.
“They refused to answer your simple question. Whether you got money from CBN or red market, how much is the unit cost of your acquisition so that we know if the airlines are cheating you or you are cheating the airlines, if you have formed a cartel to increase your prices overnight.
“From what is happening, sir, if it continues this way, the least ticket will be about N120,000 for economy and we don’t want to do that.
“We want to inform the house that we are demanding that we should be given license to import this fuel. If we can buy jets that cost hundreds of millions of dollars, we can afford to import this fuel. Let NNPC give us the right to import this fuel.”
Aviation fuel price at N500 per litre
After meeting twice within a week, stakeholders in the aviation sector, yesterday placed the price of the aviation fuel at N500 per litre.
This resolution would however, be experimented for only three days from today, within which the association of airline operators and the major oil marketers were to engage themselves and work out modalities that will lead to the permanent reduction of aviation fuel price in the country.
Group Managing Director, GMD of the Nigerian National Petroleum Corporation, NNPC, Mele Kyari announced the decision at the meeting of the stakeholders with the Special Committee of the House of Representatives investigating the circumstances surrounding the recent price hike chaired by the Deputy Speaker, Ahmed Idris Wase.
He said: “We know this is a very difficult situation. We know that once aviation fuel increases, prices of flight ticket will certainly increase and this can surely cost pains for Nigerians. That is why we are working with you to ensure that those pains are minimized to the barest minimum and one of the elements is the pricing of aviation fuel. So, what we have engaged with MOMAN, DAPMAN and the airline operators is that in three days time, their representatives will sit down and agree on a transparent base for pricing.
“That means that they ought to have a referenced benchmark that is quoted transparently in the market. They will have a referenced exchange rate for the Naira so that anyone can compete. They will also agree on a premium, which currently differs from customer to customer, depending on the volume you buy and the credit level. These are the things they can negotiate in three days so that going forward, there is a transparent decision on pricing.
This will no doubt throw up the actual value of the product in the market.
“You will no longer see these discrepancies where some people are selling at N445 and some are selling at N630.
“We agreed that they will sell at N500 in the next three days and after that, they will switch to the new price that everyone can assess.
“Lastly, as requested by the Airline Operators Association of Nigeria, they will be granted license by the authorities to import petroleum products, particularly ATK so that they can have a way of bench-marking the sales of other customers and can also bring in cheaper products whenever it is possible”.
Speaking earlier, Kyari said that at the moment there were 19 oil companies with 88 million litres of aviation fuel in the country.
Economy seat may sell for N85,000
Responding to resolutions later read by the NNPC GMD, Onyeama said that the implication of the N500 benchmark for three days was that an economy seat would cost N85,000.
He however, expressed gratitude to the House of Representatives and the NNPC for standing by the operators.
“The Nigerian legislature has been very wonderful. Without you, the airlines in Nigeria would have crumbled. I am not saying this to please you. You fought for the Customs waivers on imported aircraft, aircraft spares and for airlines to have sustainable operations. So, we owe you huge gratitude, together with the residents of this country, who signed it into law.
“We thank the GMD for wading into this. Even though at N500, our unit cost per seat will now be about N85,000. I wish we could buy this fuel at N200 so that Nigerians can afford to buy it. That is our predicament.
Earlier, chairman of the Committee and Deputy Speaker, Wase had picked holes in the presentation of the Chief Executive, Nigerian Midstream and Downstream Regulatory Authority, NDMPRA, Ahmed Farouk represented by an Executive Director, Ogbogu Ukoha, who said the prices had been discounted.