Dangote Petroleum Refinery has announced a reduction in the price of aviation fuel (Jet A1) to N1,650 per litre, marking a N100 or 5.71% decrease from the previous price of N1,750 per litre. This move is expected to provide significant relief for airline operators grappling with escalating operational costs in Nigeria's aviation sector.
Price Cut Amid Rising Global Oil Prices
The earlier increase in aviation fuel prices was largely driven by rising global crude oil prices. However, the latest price cut by Dangote Refinery is part of broader efforts to ease pressures on operational costs within the aviation industry. The refinery, in a statement on Monday, May 18, disclosed that the reduction is accompanied by a 30-day interest-free credit facility backed by bank guarantees for marketers and airline operators.
Transition to Naira-Based Pricing
In addition to the price cut, Dangote Refinery has announced a transition from a dollar-denominated pricing structure to a naira-based model. This change aims to reduce foreign exchange pressure on operators, further supporting the financial stability of airlines. Aviation fuel, commonly referred to as Jet A1, accounts for the largest percentage of operating expenses for airlines and directly impacts the cost of flight tickets and operations.
Relief for Airlines
The price reduction comes as a huge relief for airlines, which have consistently expressed that spiralling jet fuel prices have caused considerable financial burdens for local carriers. The Airline Operators of Nigeria revealed that Jet A1 prices rose from roughly N900 per litre before the conflict to between N2,700 and N2,900 per litre, with some outlets reportedly selling the product at as high as N3,300 per litre.
Chairman and Chief Executive Officer of Air Peace, Allen Onyema, criticized the pricing trend, stating that it raises serious questions about transparency and pricing discipline among fuel distributors. He noted that marketers must be called to account to explain how prices rose by as much as 300%, even when Dangote's supply remains the cheapest and some of them source directly from the refinery.
Volatility Concerns Remain
While the latest price cut by Dangote Refinery should appease the aviation sector, the reductions could still be susceptible to volatility in the global oil market. The threat of supply disruptions due to political instability looms, potentially impacting future fuel prices.
Senate Unhappy with Rising Airfares
In related news, the Senate has invited the Minister of Aviation and Aerospace Development, Festus Keyamo, alongside key aviation agencies and airline operators, to an emergency meeting over the sharp rise in domestic airfares. Lawmakers described the current pricing trends as unacceptable, warning that they risk putting air travel out of reach for many Nigerians. According to the Senate, fares on routes such as Abuja–Lagos, Abuja–Enugu, and Abuja–Ilorin have climbed to between N400,000 and N650,000.
