The Nigerian oil industry has been thrown into disarray following a suggestion by the Federal Government that Dangote Refinery may become the exclusive supplier of Jet A1 fuel to Nigerian airlines.

This development emerged after the Minister of Aviation and Aerospace Development, Festus Keyamo, hinted at the decision during an interview on Channels Television. He revealed that airline operators had chosen, with his endorsement, to source all their jet fuel exclusively from Dangote Refinery.

Keyamo, during the interview, remarked, “The airline operators just met recently. With my blessing, it’s a decision from the airline operators in Nigeria that they should only buy from Dangote Refinery Jet A1 fuel. You can see that yesterday we started a naira-for-crude purchase with Dangote. It’s all naira, no dollar component.”

However, after backlash and confusion within the industry, the minister clarified his remarks on X (formerly Twitter). He denied claims of the government endorsing Dangote as the sole supplier. “The correct position is that the Airline Operators of Nigeria voluntarily decided they would patronise Dangote Refinery in their purchase of Jet A1 fuel. NOT THAT THE FEDERAL GOVERNMENT APPROVES DANGOTE REFINERY AS SOLE SUPPLIER. THAT IS NOT CORRECT,” Keyamo wrote.

This is a misrepresentation of what I said. The correct position is that the Airline Operators of Nigeria voluntarily decided they would patronise Dangote Refinery in their purchase of JET A1 Fuel. NOT THAT THE FEDERAL GOVERNMENT APPROVES DANGOTE REFINERY AS SOLE SUPPLIER. THAT…https://t.co/ZptNL7qLgM

—Festus Keyamo, SAN, CON, FCIArb (UK) (@fkeyamo) October 8, 2024

Despite Keyamo’s clarification, stakeholders in the oil industry remain concerned. Citing the Petroleum Industry Act (PIA), they argue that such moves—whether voluntary or not—could distort market dynamics by giving undue preference to one supplier. The PIA promotes competition and discourages monopolies in the now fully deregulated industry, allowing buyers and sellers to engage freely based on market principles.

Industry players, including officials from local airlines, warn that concentrating Jet A1 fuel sales on a single supplier could create potential risks.

“What happens when the sole supplier is overwhelmed by industry demand and fails to deliver? This could lead to jet fuel shortages, destabilising the aviation sector,” noted an airline official who spoke anonymously to The Guardian. They further questioned the implications of such a decision when other local refineries come online, challenging the monopoly.

Stakeholders argue that deregulation, as outlined in the PIA, is meant to promote competition, not government interference. They emphasise that monopolies could hamper the aviation industry’s growth and lead to supply disruptions if a single supplier fails to meet the sector’s fuel needs.

Many voices within the industry are calling for the full implementation of the PIA, urging the Federal Government to adhere to the principles of free-market competition. They argue that the Airline Operators of Nigeria (AON), while representing airline interests, does not have the authority to compel members to source fuel from a single refinery. (The Guardian)