The Dangote Petroleum Refinery has announced a new gantry price of N1,820 per litre for aviation fuel, a strategic move to enhance pricing transparency in Nigeria's jet fuel market. This development comes as airline operators continue to voice concerns over the high cost of Jet A1 fuel and its severe impact on their operations.
According to a report by Vanguard, the refinery's price adjustment aims to provide a clearer benchmark for the industry. However, despite this effort, airlines are still purchasing fuel at significantly higher rates, often exceeding N2,230 per litre from marketers.
Regulatory Guidance and Market Reality
The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) had earlier issued a pricing guideline suggesting that aviation fuel should be sold within a range of N1,760 to N1,988 per litre in Lagos and approximately N2,037 per litre in Abuja. This guidance was based on prevailing market conditions and followed extensive consultations with airline operators, oil marketers, depot owners, and other industry stakeholders.
Despite these recommendations, market checks reveal that actual selling prices remain well above the suggested band. This discrepancy has heightened concerns among aviation stakeholders, who argue that the lack of enforcement undermines the regulatory framework.
Calls for Greater Pricing Transparency
Olatide Jeremiah, Chief Executive Officer of Petroleumprice.ng, has called for increased transparency in the pricing structure of aviation fuel. He urged the Dangote Refinery to publish its daily gantry prices, stating that such a move would help reduce excessive margins by intermediaries and curb artificial price increases.
“Improved transparency could ease the financial burden on airlines and bring much-needed stability to the market,” Jeremiah noted. He emphasized that clear pricing signals would enable airlines to plan better and reduce the volatility that currently plagues the sector.
Airlines Highlight Operational Challenges
Chibuike Uloka, spokesperson for United Nigeria Airlines, explained that the aviation fuel market operates under a free-market system, which limits the regulator's ability to enforce fixed prices. He clarified that the NMDPRA's pricing guidance is merely advisory, based on factors such as landing costs, while marketers ultimately determine the final selling prices.
Uloka stressed that the issue affects all members of the Airline Operators of Nigeria (AON), not just a single carrier. He also highlighted the dramatic rise in operational costs, noting that fuel expenses per operation have surged from about N2.9 million in January to N7.6 million. Operators using larger aircraft face even higher costs, further straining their finances.
Impact on Flight Operations
The rising cost of aviation fuel is significantly increasing operational expenses for Nigerian airlines. This has led to delays, rescheduled flights, and cancellations, causing widespread disruptions for travelers. According to operators, the scarcity of Jet A1 has worsened in recent days, leaving many passengers stranded and forcing others to reconsider their travel plans.
Stakeholders are now calling for urgent action to address the pricing disparity and ensure that the benefits of local refining reach the aviation sector. The Dangote Refinery's new price is seen as a positive step, but without enforcement and transparency, airlines may continue to struggle under the weight of high fuel costs.
