- Say marketers cause artificial inflation, manipulate fuel price
- Suspension of flights to go on unless…
By Chinelo Obogo
Despite denials by marketers that there is no manipulation in cost of aviation fuel, the Airline Operators of Nigeria (AON) has insisted they are causing artificial scarcity and inflation.
Speaking on Channels TV on Thursday, the spokesperson of the AON, Prof. Obiora Okonkwo, said some Nigerian airlines may be forced to suspend operations before Monday if the pricing is not urgently addressed.
“The AON are insisting that fuel marketers are to be blamed for what they describe as deliberate price manipulation and artificial scarcity, accusations the marketers have denied.
“We want to call out the marketers because we do not want a shutdown. We are truly at the last breath. If nothing is done between now and Sunday, some airlines may not survive into Monday,” he said.
The AON said the spike in the price of Jet A1 fuel cannot be justified and that just a month ago, airline operators were purchasing Jet A1 at below ₦1,000 per litre, with prices ranging between ₦950 and ₦970 but that today, that same litre is being sold at prices ranging from ₦2,500 to as high as ₦3,300, an increase of between 150 and 300 percent depending on the location.
Prof. Okonkwo acknowledged that global energy market pressures, partly driven by the ongoing crisis in the Gulf region, have contributed to rising crude oil prices.
He noted that world crude prices, which were around $70 per barrel before the crisis, have at times exceeded $100.
However, he said that the spike being experienced at Nigerian airports is disproportionate to any cost increase.
According to Okonkwo, the Dangote Refinery currently supplies 95 percent of aviation fuel to the Nigerian market saying that they exactly what the Dangote refinery charges marketers.
He stated that based on available information, the depot price for this week was approximately ₦2,099 per litre and when logistics is factoring in, the pump price should not exceed ₦2,300 per litre. Instead, he said operators are being made to pay ₦2,700 to ₦3,300.
He said, “Every Friday, the world knows the price set by Dangote’s refinery for the coming week’s sales. We know the sales figures, we know the prices and these prices are not what most of the marketers who play all these games actually charge.
“That is where the problem is. The refinery sets and publishes its depot prices transparently. The manipulation happens further down the chain, where fuel marketers set their own pump prices with little accountability.”
The AON also accused the marketers of deliberate creation of artificial scarcity saying fuel that should ordinarily be available to operators at the depot price is being diverted and then resold through the black market at inflated prices.
He said operators who arrive to refuel their aircraft are sometimes told there is no fuel available at the listed price, only to be offered the same fuel at a higher rate.
He added that the terms of payment have also shifted as operators previously had the option of receiving invoices and paying weekly or biweekly, but that marketers are now demanding cash payments on the spot.
He said that despite the severity of the crisis, operators have chosen not to pass the additional costs on to passengers, saying that if airlines were to reflect the current fuel costs in their ticket prices, a one-hour domestic flight would cost a minimum of ₦600,000.
He said the financial reserves that operators have built up have been depleted and some members have already stopped operations.
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