Despite the reduction of gantry price of aviation fuel also known as Jet A1 by the Dangote Refinery and Petrochemicals, the retail price of aviation fuel remains elevated, selling at between N1,900 and N2,000 per litre, checks by Daily Trust have shown.

Despite the reduction on Monday, our correspondent gathered that one of the fuel marketers supplying aviation fuel further increased its price per litre.

A statement from Dangote on Monday disclosed that the refinery reduced the price to N1,650 per litre from N1,750 per litre, in a move aimed at easing cost pressures on airlines and ensuring uninterrupted jet fuel supply across the country.

The latest reduction comes in addition to a 30-day interest-free credit facility backed by bank guarantees for marketers and airline operators, as well as the refinery’s transition from a dollar-denominated pricing structure to a naira-based model.

Daily Trust reports that the domestic carriers had reduced flight frequencies over the development amidst skyrocketing fuel prices exceeding N2500 per litre.

The Airline Operators of Nigeria (AON) had previously threatened to shut down but the operators shelved the plan following interventions by the Federal Government which facilitated meetings with stakeholders including fuel marketers.

However, operators said the several meetings had not yielded results while some of the airlines had cut their flight frequencies.

To cushion the effect of the Jet fuel price, Dangote slashed the price of Jet A1 by N100.

The statement by the refinery said, “Dangote Petroleum Refinery & Petrochemicals has reduced the price of aviation fuel (Jet A1) to N1,650 per litre from N1,750 per litre, in a move aimed at easing cost pressures on airlines and ensuring uninterrupted fuel supply across the country.

“This is in addition to a 30-day interest-free credit facility backed by bank guarantees (BG) for marketers and airline operators and a shift from a dollar-denominated pricing structure to a naira-based model.”

The refinery explained that its decision “is expected to provide relief to airline operators by lowering fuel procurement costs, improving operational stability, and supporting efforts to moderate airfares.

But checks yesterday indicated that the downward price review had not translated into lower prices.

As of yesterday, a litre of Jet A1 is sold at N2000 per litre in Abuja and Kano while it is between N1,910 and N1,925 per litre in Lagos.

Just yesterday, one of the marketers wrote a letter to one of its airline customers, notifying it of a price review.

The marketer (name withheld) said the adjustment became necessary “due to the continued volatility in the petroleum products market, particularly the increase in ex-depot pricing and associated supply chain costs.

“As these factors directly impact procurement and logistics, the review is required to ensure the sustainability of supply and the maintenance of our service standards,” the marketer said.

Daily Trust reports that the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) had pegged av’ation fuel prices at N2,037 per litre in Abuja.

The regulator also set a Lagos price band between N1,760 and N1,988 per litre in order to stabilise supply and pricing following vitality in the jet fuel value chain.

However, industry stakeholders and operators queried the price disparity despite the cut in the ex-gantry price.

“The announcement by Dangote gave us hope, but what we are seeing in the market is different. Most marketers are yet to adjust. The cost remains extremely high and airlines are still struggling,” one of the operators said.

The high cost of Jet A1 has remained one of the biggest challenges facing Nigeria’s aviation industry and the situation was worsened by the disruption in global fuel supply due to the ongoing US-Israel war in Iran and the consequent closure of the Strait of Hormuz, a maritime route controlling one fifth of global fuel supply.

The current crisis is not peculiar to Nigerian aviation as many airlines especially in Europe had been pushed into taking drastic measures including reduction in flights to hedge against the fuel price hike.

Airlines have repeatedly warned that rising operational costs could force some operators to reduce routes, cancel flights, or increase ticket prices further.

Industry analysts say although Dangote Refinery’s price reduction was expected to create competition and force prices down, several factors are preventing immediate changes in the retail market.

According to experts, transportation logistics, foreign exchange volatility, taxes, and storage costs continue to affect final market prices. They also noted that some marketers were still dispensing old stock purchased at higher rates before the refinery’s adjustment.

For instance, due to the specialised way of handling aviation fuel, marketers pay different charges to the aviation regulatory authority (NCAA), the airport authority (FAAN) which are built Into the logistics cost.

However, aviation analyst, Capt. Samuel Caulcrick said it appears not much has been achieved after the recent government intervention.

He stated that the Federal Competition and Consumer Protection Council (FCCPC) should step in by investigating the profit margins of the marketers on a litre of Jet A1.

“I don’t know why FCCPC is not looking in that direction. By now they should have been inspecting the books of the marketers. How much did you buy from Dangote or whatever? What are your logistics costs,” he said.

With N1,650 per litre as ex-gantry price, he explained that the only margins to be added by the marketers are profit and logistics which means the prices should be lower.

Caulcrick stated that the FCCPC is to make sure that members of the public are not exploited by ensuring transparency in pricing.

He however called on the federal government to reduce the charges and levies paid in the fuel supply value chain. (Daily Trust)

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