JET-A1: Middlemen defy regulator’s pricing band, raise price to N2,230/litre
Aviation Sector Faces Rising Fuel Prices Amid Regulatory Challenges
By Udeme Akpan, Energy Editor, and Dickson Omobola
Nigerian oil marketers continue to sell aviation fuel, known as Jet A1, to airlines for prices starting at N2,230 per liter, significantly above the recommended pricing set by the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA). This situation is causing alarm within Nigeria’s aviation industry.
The NMDPRA has suggested that aviation fuel should be priced between N1,760 and N1,988 per liter in Lagos, and about N2,037 per liter in Abuja. This guidance followed consultations with stakeholders, including aviation operators and oil marketers, aimed at addressing recent pricing disputes.
Despite these recommendations, recent market checks reveal that airlines are still paying much higher prices, with some transactions reaching N2,230 per liter. Factors contributing to these elevated prices include strong demand for Jet A1 and the presence of intermediaries seeking higher margins. The distribution chain often involves multiple middlemen, further exacerbating price increases.
The Dangote Petroleum Refinery has been noted to have an available stock priced at approximately N1,800 per liter; however, intermediaries have significantly marked up prices, leading to costs well above the NMDPRA’s guidelines. This persistent pricing gap highlights inefficiencies in the supply chain and raises concerns about the effectiveness of the regulatory framework in a predominantly market-driven sector.
Industry experts caution that if supply constraints and arbitrage opportunities within the distribution network are not addressed, airlines may continue to experience inflated operational costs, potentially impacting ticket prices and the overall stability of the aviation sector.
In a statement to Vanguard, Olatide Jeremiah, Chief Executive Officer of Petroleumprice.ng, emphasized the need for greater transparency in jet fuel pricing. “Dangote Refinery should urgently publish its daily jet fuel gantry prices to mitigate excessive margins imposed by middlemen,” he said.
Chibuike Uloka, spokesperson for United Nigeria Airlines, echoed concerns about rising operational costs, citing that the cost of a flight operation for airlines like Ibom Air has surged from N2.9 million in January to N7.6 million currently. “It’s not a controlled market; it’s a free market,” Uloka explained. “While the NMDPRA suggests price points based on market assessments, actual transactions are far from that.”
Capt. Ado Sanusi, Managing Director and Chief Executive Officer of Aero Contractors, called for a transparent pricing system to prevent exploitation of airlines amid market volatility. He argued for better insight into the pricing mechanisms of fuel suppliers.
Amid these challenges, the Aviation Round Table Initiative (ASRTI), an industry think-tank, has urged the federal government to implement an urgent bailout for domestic airlines. They warned that soaring Jet A1 prices—rising from about N900 per liter in February to between N3,000 and N3,300 by mid-April—pose a significant threat to airline operators already enduring high costs and currency fluctuations.
In a letter addressed to President Bola Tinubu and other key aviation officials, ASRTI outlined immediate measures to stabilize the sector, including a temporary Jet-A1 refund mechanism and a contracted six-month fuel supply agreement at negotiated prices. The organization advocates for targeted financial support for airlines to alleviate liquidity challenges during this critical period.
These proposed measures aim both to stabilize the current situation and to initiate comprehensive structural reforms within the aviation industry to prevent future crises. The ASRTI suggests establishing a National Energy Price Protection Program and conducting audits of aviation-related charges to ensure compliance with international standards.
As the sector grapples with these significant challenges, the call for transparency and regulatory efficiency continues to grow.
