The airlines are said to have lost in two weeks N7.2 billion to aviation fuel scarcity.
The product sells for N160 per litre from N98 which it hitherto sold for.
As a result of the scarcity, oil marketers are unable to supply enough JET-A1 to airlines. The price of the commodity in Nigeria is regarded as the highest in the world, leaving operators to groan under heavy operational costs, of which aviation fuel alone, accounts for over 50 percent.
Currently, some of the major airlines like Arik Air, Aero and Air Nigeria are finding it difficult to cope with the situation which has refused to abate.
Two weeks ago, when the scarcity again became noticeable, Arik Air and Air Nigeria’s flights that were scheduled to depart Enugu at 10.30a.m could not do so until 5.30p.m, leading to protests from passengers.
By the following Tuesday, an Aero flight scheduled to depart Lagos for Abuja at 9.50p.m did not depart the airport until well past midnight. The passengers only arrived at their destinations at 2a.m the next day.
One of the passengers on the flight said the flight was originally scheduled to depart at 5.55pm, but was asked to reschedule for 9.50p.m.
According to an Arik Air passenger, “The excuse they gave us was that they have not been able to get fuel from oil marketers due to its scarcity, but they have kept us in the dark since morning. The only thing I want from them now is the refund of my money.”
Another passenger of the airline to Port Harcourt who refused to disclose her identity said she was billed to sit for an exam in Port Harcourt penultimate Tuesday at 2p.m, but as at 5:30p.m, she was still stranded at the Lagos airport.
This development has put virtually all the airlines in a tight corner, leading to massive cut on their scheduled routes, amid serious competition for the few available seats offered to travellers.
Arik for instance, does an estimated 120 flights per day, but could only do 80 flights leading to a loss of 40 flights as a result of delays and cancellations, thus losing N269 million a day. Arik spends N400 million on fuel every week.
As for Aero Contractors which is second largest domestic carrier, and ordinarily operates about 80 flights per day, it has been operating between 40 and 45 flights per day leaving it with a short fall of about 15 to 20 flights per day. The airline by calculation has been losing close to N119 million per day.
Also lamenting the loss which his airline has had to endure, a senior official with IRS said the airline operates 15 flights daily, but has had to scale down flight operations. The airline operates with Fokker 100 which carries at least 100 passengers at once. For having to slow down on its operations, it is losing well over N25 million a day to the biting cost of aviation fuel.
And for Air Nigeria, the third largest airline, BusinessDay investigations show that the airline is losing about N100 million a day. “We have had to cope with the crippling effect of this aviation gas for operations. You can see we can’t fly as well as we should and have had to ration our routes,” an official of the airline said.
As a result of the high cost of the commodity in the country, both local and international airlines say they prefer to refuel their aircraft in neighboring countries like Ghana, Togo and elsewhere, thereby depriving the country from milking from the huge businesses that abound.
Lamenting the situation, Harold Demuren, director general, Nigerian Civil Aviation Authority (NCAA), said while marketers have raised the price of their product over time, the carriers have only marginally increased air fares and thus stressed: “We cannot operate this way.”
Demuren noted that, “The price of aviation fuel in Nigeria is ridiculously too high. We need to knock this down. We are working on it and I believe we will be able to do this. We can’t continue this way.”
The marketers have however attributed the cost of the product to high cost of import, maintaining that crude oil is not refined in Nigeria.
While they say they regretted that the cost of refining and importation to Nigeria were on the high side, they added that only when these are solved could the industry witness stability.
Meanwhile, the Federal Government has set a 24-month target to carry out full rehabilitation work on the country’s three refineries for maximum efficiency.
The refineries are Port Harcourt Refining Company with an installed capacity of 210, 000 barrels of crude oil per day; Kaduna Refining and Petrochemicals Company with a production capacity of 110,000 barrels per day and Warri Refining and Petrochemicals Company with an installed capacity of 125,000 barrels per day, bringing the total national capacity to 445, 000 barrels per day.
BusinessDay gathered that when completed, the Federal Government is expected to save annual revenue of about N1.3 trillion currently spent on petroleum products importation and the associated subsidy, which has become a major cesspool for oil cartels in the country.
All these targets are coming on the heels of the ongoing negotiation with the Chinese for the construction of three new Greenfield Refineries to be sited in Lagos, Bayelsa and Kogi States.
A top presidency source told BusinessDay on Sunday that the nation’s carrier, the Nigeria National Petroleum Corporation (NNPC), has already mobilised financial resources from its internally generated funds to handle the major rehabilitation works in the affected refineries.
BusinessDay investigations revealed that Austen Oniwon, Group Managing Director (GMD), NNPC, under the directives of Diezani Alison-Madueke, minister of petroleum resources, has begun ordering long lead items ahead of the conclusion of negotiations between NNPC and JGC/Tecnimont Consortium, the original contractors that built the refinery, by August this year, for the commencement of the rehabilitation works at the Port Harcourt refinery, the first on the line of rehabilitation, which is expected to be completed by the end of the first quarter of 2012.
Kaduna Refinery is expected to follow immediately, in the 24 months rehabilitation timetable of the Federal Government, while Warri, which is currently operating at over 65 percent installed capacity will end the rehabilitation programme before the end of 2013.
Though the source was reluctant to say how much NNPC will be spending in all for the rehabilitation of the three refineries, BusinessDay, however, gathered that the Port Harcourt refinery alone is expected to gulp not more than N1.5 billion ($150 million).
Once completed, the presidency source, who spoke to our correspondent on condition of anonymity, said the country will once again return to the part of sufficiency in kerosene and diesel production, thus ending the long years of sufferings of the ordinary Nigerian.
“This is going to save the Federal Government huge sums of money because in the first place, government is not going to spend a kobo to do the work. NNPC through its savings has been able to muster enough resources to carry out the work. This is not only a feat under the current minister of petroleum resources and the GMD of NNPC, but also for Nigeria as a country. This is the first time that NNPC is undertaking this type of exercise that it won’t be asking for Federal Government financial intervention,” the source said.
