By Derrick Bangura

In a fresh revelation, marketers of petroleum products under the aegis of Major Oil Marketers Association of Nigeria (MOMAN) have alleged that the federal government through the Nigerian National Petroleum Company (NNPC) Limited has been subsidising the price of Aviation Turbine Kerosene (ATK) commonly known as aviation fuel, in the past weeks, against the international price.

MOMAN specifically said in comparative terms, the aviation industry was already benefitting from government’s intervention when local prices are compared to West African regional prices, despite the deregulated status of aviation fuel.
The marketers warned that the situation was not sustainable given the already humongous N4 trillion annual subsidy cost being borne by the country.

The association stated this yesterday in a statement signed by its Chairman, Mr. Olumide Adeosun, which was sent to THISDAY.

“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. This situation is hardly sustainable given the already humongous N4 trillion cost of the PMS subsidy,” MOMAN stated.

It explained that with respect to aviation fuel, verifiable prices in West Africa ranged from $1.25 per litre in Ghana to as high as $1.51 per litre in Liberia, saying even then, the product has remained scarce across the sub-region.

MOMAN maintained that due to the intervention of NNPC over the last several weeks, aviation fuel was landed into marine terminal tanks in Nigeria at between N480 and N500 per litre, depending on the logistics efficiency of the operator.

It further explained that, “due to high costs of specific handling of Jet A1 (special transport and continuous filtration), the product is sold on the tarmac at Ikeja (our benchmark), between N540 and N550 per litre and across other airports at between N570 and N580 per litre.

“During this period of NNPC intervention, as 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.”

However, the marketers admitted that those interventions were sometimes necessary to mitigate shocks and help the economy, the operating environment and the public to adjust to the new realities while efforts were being made and innovations introduced to optimise costs and increase efficiencies.

While noting that those interventions cannot be permanent in nature, MOMAN expressed hope that the war in Ukraine came to a speedy conclusion.

It also expressed hoped that the integration of products from the local refineries including the four NNPC’s refineries under rehabilitation, the Dangote Refinery under construction as well modular refineries into the supply chain, would mitigate the high costs being borne by the government and Nigerians.

MOMAN opined that a return to cost recovery, free market and competitive economics including access to foreign exchange at competitive rates was inevitable for the sustainability of the production and distribution framework in the petroleum downstream industry in the country.

It added that there was an immediate need to prepare the operating environment and indeed the larger economy for this eventual return.

MOMAN restated its committed to the institutionalisation and sustainability of a viable petroleum downstream sector in Nigeria, pledging that it would continue to lend its support towards easing the burden of Nigerians at this difficult time.

The marketers also empathised with all users of petroleum products including airline operators, private vehicle owners, logistics and transport companies, manufacturers, cooking gas users in homes and all members of the public who were affected by the worldwide petroleum products price increases, which impact logistics, transportation, distribution, and operation costs.

It observed that the petroleum products downstream industry, which was engaged in logistics and distribution, was also suffering the impact of these higher costs brought about by the post-Covid world economy and the war between Russia and Ukraine.

According to the body, “the escalating fuel price cycle we find ourselves in, is unfortunate, MOMAN wishes to clarify to Nigerians that the situation in Nigeria is not country-specific, but a global issue.

“Aviation fuel (Jet A1), like other petroleum products used in Nigeria is not produced in-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.

“These shocks have seen international trading premiums, costs of vessel freight, and other transport costs skyrocket to worrying levels. Separately, international traders are exploiting the situation by selling only to the highest bidders.”