Foreign airlines have, in the past, had their foreign exchange trapped in Nigeria by the Federal Government
The difficulty in accessing foreign exchange from the Central Bank of Nigeria (CBN) to import aviation fuel has been attributed as one of the reasons for the high cost of Jet A1, among other reasons.
Most of the time, oil marketers are unable to get $5 million to import the commodity, but end up getting a paltry $500,000, which is inadequate to source the product overseas and they are forced to get forex at the black market.
A former Managing Director of the Federal Airports Authority of Nigeria (FAAN), who pleaded anonymity, disclosed this to New Telegraph at the weekend.
He noted that the solution to stem the skyrocketing Jet A1 price would be for government to help the airlines if they intervene on behalf of the traders and set up a monitoring committee to ensure that the traders that they have intervened and helped do not overly make profit from intervention.
He noted that as long as there is no intervention, these traders were ready to go into the market and get products on their own, adding that there was the need to sell and recoup.
“The price keeps going up. weeksThere are global events that keep making the price of the product go up. That is the typical situation we are in. It is a case of everyone is left on his own and God for us all. We are now at the vagaries of the market forces. There is nothing any one of us can do beyond that,” he noted.
He said that marketers don’t dictate price, reiterating that they cannot even dictate price to bye-products because it is a sellers’ market.
According to him, “what you buy is what you sell. There is no emotion; there is no sentiment about it at all. The marketers you see at the airport go to Apapa to all the traders, whether third party traders or direct traders selling products, they tell them this is the price. It is left to you to determine whether you can buy at that amount or not. In three weeks, the product climbed from N508 per litre to N520, N535, N545 and N550 at the reception coastal storage depots, Apapa.
“If the product is sold at an average of N550 at the reception depot, the marketer buying has additional charges, additional cost to it. Apart from the product cost, he has what we call haulage cost or transport cost because he has to bridge the product from the reception depot to his own storage depot at the airports. It could either be the airport in Lagos, Abuja, Kano, Maiduguri, Sokoto, anywhere in the country.
“The farther you go beyond Lagos, the costlier it comes. We all know the cost of diesel. All the trucks that are bridging products from Apapa don’t use petrol. They are large diesel trucks and they range in capacity between 40,000, 45,000 and 50,000 litres. You can imagine the consumption of diesel.
“Diesel price in the last two months has gone up to N700 per litre. An even transport cost, which is charged per litre, has quadrupled in the last three months. Marketers who need to buy from traders need to move the product to various airports to sell to airlines,” he added.
The cost of air tickets along major routes across the country has more than doubled due to the unexpected increase in aviation fuel (Jet A1). Prior to the recent hikes, a one-way ticket for a flight to Abuja from Lagos on an economy package would range between N30,000 and N40,000, depending on the airline.
However, the same route fare is currently over N50,000.