The Group Managing Director, GMD, of Nigerian National Petroleum Company, NNPC Limited, Mele Kyari, on Monday, disclosed plans to grant licence to the Airline Operators Association of Nigeria, AOAN, to commence importation of Aviation Fuel otherwise called ATK.
Kyari disclosed this at the end of the investigative hearing into the price hike of ATK by oil marketers, held at the instance of the House of Representatives, during which the House leadership, Major Oil Marketers Association of Nigeria, MOMAN, and Depot and Petroleum Products Marketers Association of Nigeria, DAPPMAN, NNPC Limited unanimously resolved to fix the ATK price at N500 per litre, as against N670 per litre.
“We know this is a very difficult situation. We know that once aviation fuel increases, prices of flight tickets will certainly increase and this can surely cost pain for Nigerians. That is why we are working with you to ensure that those pains are minimized to the barest minimum and one of the elements is the pricing of aviation fuel.
“So, what we have engaged with MOMAN, DAPMAN and the airline operators is that in three days’ time, their representatives will sit down and agree on a transparent base for pricing. That means that they ought to have a referenced benchmark that is quoted transparently in the market.
“They will have a referenced exchange rate for the Naira so that anyone can compete. They will also agree on a premium which currently differs from Customer to Customer, depending on the volume you buy and the credit level.
“These are the things they can negotiate in three days and close so that going forward, there is a transparent decision on pricing. This will no doubt throw up the actual value of the product in the market. You will no longer see these discrepancies we have seen where some people are selling at 445 and some are selling at N630. This will completely bring close such that you will not see these differences.
“We also agreed that in the interim, between now and the three days that have to close negotiations, (the lowest price we have seen as of this morning was N445 and a high of N605. There is a trader that is selling at N630 and we don’t think this is normal and so, we discounted it), we agreed that the will sell at N500 in the next three days and after that, they will switch to the new price that everyone can assess.
Speaking earlier during the investigative hearing, the Deputy Speaker, Ahmed Wase chided the authorities of Nigerian Midstream and Downstream Regulatory Authority, NMDPRA, for failing in its responsibilities, saying: “You are supposed to regulate their (oil marketers) activities, are you just giving the licence? What are the minimum requirements; what is expected of that company that you are authorizing them to bring in this product; is it that they have the opportunity and then the leverage to tell you whatever rate they want and it has to stand? No, I don’t think so,” the Deputy Speaker queried.
While noting that the investigative hearing initiated by any Parliament is a quasi-court, Wase said: “You are the one to give the direction. I cannot listen to them (airline operators) much because you are the regulator, the law allows you to do that, the law allows you to issue licence, it’s not everybody that is allowed to bring in this product.
“GMD knows what suffering he has gone through in trying to bring back normalcy because of the carelessness of some persons has caused us. Is it the past situation we have found ourselves that you are trying to take us back to? I said we are not, you remember I sued the word don’t blackmail this government? We are not willing to accept blackmail,” Wase warned.
In his remarks, Chairman/Managing Director of Air Peace, Allen Onyema who frowned at the fraud being perpetrated by the oil marketers and the reluctance to give the actual cost of landing cost of ATK, said: “Mr Deputy Speaker, sir, nobody on this side of the divide has answered your question. You have been asking them one particular question. Everybody is dancing around it.
“What the Deputy Speaker wanted to hear is how much did buy this fuel per litre. By now, you must have computed it. They are dancing around it and telling you stories. That is what you have been asking, sir. Before they came here, they were supposed to have computed their unit cost.
“I have the mandate of every airline in this country to announce to you that if they can’t come down from their rooftops, we have only three more days to be able to fly. We are not threatening this country. We have been subsiding what we have been doing.
“The rate as of today is N630, N640 and N605. We have an aircraft going to Kano, it has about 7000 litres of fuel in it, multiple it, sir by N630. The unit cost per seat is about N70,000 per seat. You have not talked about insurance that is very static. Nigerians pay heavy insurance premiums because this country is stigmatized.
“You have to insure abroad. It is a must before all the insurance companies in Nigeria put together cannot even pay for one aircraft. So, you have to go abroad to insure. Yet the fuel cost which is supposed to be about 30 to 40 per cent in every clime, in Nigeria it about 70 per cent even before time. So, so you can now see the mortality rate of airlines in this country.
“They refused to answer your simple question. Whether you got money from CBN or red market, how much is the unit cost of your acquisition so that we know if the airlines are cheating you or you are cheating the airlines if you have formed a cartel to increase your prices overnight. From what is happening, sir, if it continues this way, the least ticket will be about N120 for economy and we don’t want to do that.
“We want to inform the house that we are demanding that we should be given a license to import this fuel. If we can buy jets that cost hundreds of billions of dollars, we can afford to import this fuel. Let NNPC give us the right to import this fuel, we won’t complain, sir.
Speaking after the resolution of the crisis, Onyema who applauded the House intervention, said: The Nigerian Legislature has been very wonderful, without you, the airlines in Nigeria would have crumbled. I am not saying this to please you.
“You fought for the Customs waivers on imported aircraft, aircraft spares and for the airlines to have sustainable operations. So, we owe you huge gratitude, together with the President of this country who signed it into law.
“For the NNPC GMD, he was very transparent and was not on any side except on the side of truth. He told me it was too possible to bring down the price to N200, but he brought it to where it is. The DG NCAA has always breadth down our neck to ensure that fly safe.
“We thank the GMD for wading into this. Even though at N500, our unit cost per seat will now be about N85,000 barely insurance and other things. That is our pain. I wish we could buy this fuel at N200 so that Nigerians can afford to buy it. That is our predicament and so, the public should understand if there is shift in what they are paying now and what they are going to pay later.
“Anybody can calculate it just as it has been done here, to buy 8,000 litres of fuels at N500 per litre. How much will that give you for just one hour flight.”
On his part, the Deputy Minority Leader, Toby Okechukwu, who frowned at the level of impunity being perpetrated by some actors, said: “I believe strongly that it is better to jaw jaw than to war-war. Essentially, we all know the limitation of not getting a problem solved and the best always is to find a solution which we have done today. We will continue to work for the Nigerian people.
“I will plead that whatever assistance the GMD and the regulatory authority can give the aviation industry, they should please do because the market is a bit chaotic now and whatever impact in the aviation has security consequences.”
In his ruling, the Deputy Speaker, Wase who stressed the need for effective monitoring of the implementation of the resolution said: “We have come to terms and reached a number of resolutions and we are looking forward to a conclusion.”