Nigeria, the third largest oil producer in Africa after Algeria and Angola, makes a daily consumption of over 50 million litres of petrol, according to the Petroleum Product Pricing Regulatory Agency (PPPRA) and the Nigerian National Petroleum Corporation (NNPC). Until recently, none of the nation’s four major refineries have been operational. So, crude oil has been exported for refining and returned to the country for consumption as finished products at very high costs. This among other factors, has resulted in recurring fuel crisis which grossly affects Nigeria’s aviation sector each time it occurs.
As a result of the fuel crisis that occurred after the April 2015 general elections for instance, airline operators had to alter their normal flight schedules as they could not get aviation fuel for their aircraft. At the airports, thousands of travellers were stranded as most airlines cancelled their flights while some did just below 20 per cent of their schedules. Statistics released by the Federal Ministry of Aviation online platform called Aviation Passenger Service (APS), indicated that all the eight domestic airlines cancelled 2,840 flights in the month of April 2015 alone. This translated to losses in the volume of millions of dollars for the aviation sector.
“High cost of aviation fuel is a challenge facing Nigerian airlines and can go up to 40 percent of airline operating cost depending on the aircraft type,” states Engr. Benedict Adeyileka, former Director of Airworthiness Standards, Nigerian Civil Aviation Authority.
When refined fuel arrives the Lagos seaport in Apapa, heavy tankers are used to convey the product from Apapa to the airport in Ikeja, which is located several kilometers away. Heavy trucks parking along the airport road in Lagos because of absence of an official park, are constituting a security and safety concern and a nuisance on arrival at the international airport. They have simply become a menace, defacing the roads around the airport. One can only watch and see how this status will turn out with the ongoing Lagos airport road expansion project.
So, industry players are of the opinion that a review of fuel supply methods to the airport could help to minimize flight delays and congestion as well as airlines’ operating cost.
“About 250 trucks of Jet A1 move from Apapa to MMA daily, as fuel needs have grown over the years with increase in the number of airlines,” said Mr. Adamu Abdullahi, Director of Consumer Protection, Nigerian Civil Aviation Authority (NCAA).
With the fluctuating price of oil in the international market and emerging possible drop in crude oil sales by Nigeria to big international buyers, alongside fluctuations in currency exchange rate, operators are already apprehensive of fuel cost’s possible impact on local airline business in the near future since over 90% of local airline expenditures apart from fuel, are made in foreign exchange.
The National Assembly under President Muhammadu Buhari’s administration had restructured the NNPC and other oil sector agencies but at this twilight of the administration’s first term, impact of such exercise is yet to be felt by the aviation sector. The cost of jet A1 still depends on which part of Nigeria you are buying from.
There are numerous ways that the NNPC can help Nigeria’s aviation industry to reduce operating costs. First, there is need for the NNPC to improve on its distribution network and reactivate the underground hydrant system that was in use before January 1996. The Chairman of Airlines Operators of Nigeria (AON), Capt. Nogie Meggison suggests that the NNPC should help to reduce the operating costs of airlines by reviving the refineries and localizing the refining of aviation fuel. The Managing Director of Dana Air, Jacky Hathiramani agrees with this position and calls for an initial short term measure to minimize losses.
Secondly, NNPC should establish a Department Of Aviation Fuel (if it does not exist already) and saddle it with the responsibility to seek, create and implement other methods of revenue generation from the aviation sector for NNPC as an organization; indentify and supervise the daily aviation fuel requirement and consumption in the country and make contributions to NNPC’s data centre; ensure sufficient local refining of aviation fuel and train enough experts in aviation fuel matters.
Again, the Warri refinery’s Aviation Turbine Fuel (ATF) section should be revived. Apart from reducing the operating costs of airlines, this can generate significant income for the government through selling of aviation fuel to foreign carriers operating into Nigeria or through West Africa. This can eventually make Nigeria a fuelling hub for airplanes flying in and out of Africa, while creating jobs.
The Join Users Hydrant Installation (JUHI), a body representing most of the oil marketers, has advocated an introduction of waiver on demurrage incurred from Nigeria Ports Authority (NPA).
Besides, there is need for regular meetings between NNPC and stakeholders in Nigeria’s aviation industry to enable information sharing on how to work together for the industry’s growth in particular and the nation’s economic development.