Nigeria’s state energy company will sell aviation fuel to domestic airlines at a fixed price for three months after some companies threatened to ground their fleets.
The Nigerian National Petroleum Co. agreed to supply the product to marketing firms nominated by the airlines at 480 naira ($1.15) a liter until August, Femi Gbajabiamila, speaker of the House of Representatives, told reporters on Monday, after a meeting in the National Assembly with the NNPC, central bank and aviation industry representatives.
The meeting took place after the Airline Operators of Nigeria, a body representing the country’s larger domestic carriers, on May 8 agreed to halt plans to ground flights due to the high cost of aviation fuel, which it said was crippling their businesses and making them unprofitable, and hold talks with government.
Despite being Africa’s largest producer of crude oil, the country currently has minimal available refining capacity, leaving it reliant on energy imports. The airlines said the cost of aviation fuel had more than tripled over the past four months to 700 naira per liter as Russia’s invasion of Ukraine triggered massive disruptions to energy markets.
A group for Nigeria’s biggest fuel marketing companies, however, have contested the airlines’ claims, saying that they have been selling the product for an average of 540 naira to 580 naira a liter in recent weeks. They in turn have been buying the fuel from the NNPC, even though the market is open to importers from the private sector, the Major Oil Marketers Association of Nigeria said in a statement on Monday.
“The aviation industry is already benefiting from government’s intervention when local prices are compared to West African regional prices,” MOMAN said. The inability of the association’s members to access foreign exchange at the same rate as the state-owned firm leaves the “NNPC as the major importer of aviation fuel for now, even though the product is deregulated,” it said.
Airlines will be granted licenses to import aviation fuel in the coming months, Gbajabiamila said.
While businesses in Nigeria complain regularly about a scarcity of foreign currency, the Central Bank of Nigeria Governor Godwin Emefiele told the same meeting that he cannot issue waivers to the airlines and urged the companies to approach the country’s banks. “We do not have forex to sell,” he said.