Jet A1: Why Dangote Refinery May Not End Airlines’ Woes
Dangote refinery which plans to start selling petrol, diesel and aviation fuel in early 2020 promises to end the worry of airline operators over shortage of Jet A1 but it may not bring down the cost of supply, Daily Trust reports.
This is due to the decaying fuel hydrant infrastructure at the airports which has necessitated the use of tankers to transport fuel to the tarmac.
Daily Trust reports that there are pipelines that supply fuel from Mosimi/Ejigbo to Murtala Muhammed Airport (MMA) but which have remained unserviceable for more than two decades.
This has forced airlines into using tankers to convey fuel to the airport with the attendant cost of bridging and demurrage, apart from other charges paid to access the airport.
About one million litres of aviation fuel is consumed daily by the domestic carriers with N5 paid on a litre as cost of bridging, according to a source who gave a rough estimate of the daily requirement.
With fuel gulping 40 per cent of airline’s operating cost, it is expected that the figure would reduce by half if the hydrant system at the airport is restored.
The pipelines that transport fuel from the shore depot to the airport and from the fuel farms to the apron hydrants ruptured in 1992 and up till today, they have not been repaired, it was learnt.
Retired Group Capt. John Ojikutu, a former commandant at the MMA, said not even the much talked about Dangote refinery would solve the aviation fuel problem if the pipelines supplying to the airport are not repaired.
“Repair the pipelines that supply fuel from Mosimi/Ejigbo to the MMA depot to stop the bridging of supplies with numerous tankers and the demurrage on them to reduce at least 20% of the cost; anything short of these cannot solve the high cost of aviation fuel, not even the expected local production from Dangote refinery,” he said.
Daily Trust reports that the cost of aviation fuel has continued to increase in the last two years selling as high as N275 today from N110 two years ago.
An airline official who spoke with our correspondent, yesterday, said, “We are bullish about the coming of Dangote refinery that Nigeria will start producing Jet A1 locally but government must fix the pipelines supplying fuel to the airport.
“This is one way government can assist the local airlines that are operating almost at a loss yet they continue to provide jobs and employment to many people.
“While the price of aviation fuel has come down in other countries, including Europe and America, here in Nigeria, it has quadrupled and this is one of the challenges confronting the domestic airlines.
The situation is you pay higher for fuel in Nigeria than in countries that are non-oil producing.
“You don’t go wrong supporting your own. Government needs to do more to support the local carriers. All the over 30 foreign airlines put together do not employ as much as one airline in Nigeria yet we don’t get the requisite support from government,” the official said.
He added that “they said they have removed VAT yet airlines are still being disturbed everyday to pay VAT because the policy waiving VAT for airlines is yet to be implemented.”
Meanwhile, a source told Daily Trust yesterday that a litre of Jet A1 sells for N275 in Kano, N265 in Abuja and N250-N255 in Lagos with indications that the price may go up ahead of the yuletide.
“That is the problem we are facing now, we hope passengers would bear with us in case of any unexpected delays,” the source said pleading not to be named.
During a stakeholders’ meeting held on July 22, the Nigeria Civil Aviation Authority (NCAA) and the Federal Airports Authority of Nigeria (FAAN) resolved to liaise with the Federal Ministry of Transportation/Aviation to replace fuel hydrants if the old ones will cost much to fix and the supply points be connected to the airports.