Fuel crisis delays AfDB delegates from Nigeria

Arik Air

Arik Air

27 May 2015, Lagos – Nigerians who were billed to travel to attend the African Development Bank Annual Meeting and Conference in Abidjan were stranded at the airport as a result of the fuel crisis that ended on Monday.

Many could not travel outside of the country as delegates attending the banking conference in Ivory Coast were left stranded or forced to pay additional costs after planes were grounded.

Arik Air Ltd., Nigeria’s biggest airline, delayed or canceled dozens of flights since the weekend as guests prepared to make their way to Abidjan to attend the African Development Bank’s annual meeting. The conference draws finance ministers and central bank officials from across the continent and is a networking opportunity for bankers.

Andrew Alli, the chief executive of Africa Finance Corp., spent extra money on backup travel plans rather than miss the event. His team booked flights from Lagos, to Abidjan via Ghana’s capital, Accra, and Lome in Togo, on different airlines.

“This is one of the hidden costs of doing business within Africa,” Alli said in an interview at the AfDB meeting on Tuesday.

“We knew there was a fuel strike in Nigeria and it had been affecting domestic flights. As a precaution, as we felt it would start to affect international flights, we booked a second flight to Abidjan.” Flying in West Africa is often beset with difficulty due to under-equipped fleets, departure schedules that demand long layovers, strict visa regulations and costly tickets. The number of air passengers traveling both domestically and internationally in Nigeria surged to 3.75 million in 2013 from 520,263 in 2003, according to World Bank data.

Banks Shut
A big focus of the AfDB’s work and its annual conference is on expanding infrastructure on the continent to help spur investment and reduce the cost of doing business. The bank estimates African nations need to spend $93 billion each year until 2020 to help fix power shortages, inadequate water supplies and expand transport and Internet networks.

A lack of oil refining capacity means Nigeria suffers frequent fuel shortages even though it’s Africa’s biggest crude producer of about 2 million barrels a day. The latest crisis shut banks and threatened operations of businesses including MTN Group Ltd., the biggest mobile-phone company on the continent. Gasoline and diesel retailers had halted distribution because they said the outgoing government of President Goodluck Jonathan owed them about $1 billion in outstanding payments.

President-elect Muhammadu Buhari will take over from Jonathan on May 29, causing anxiety among the fuel marketers that the new government may take longer to pay the claims. They agreed late on Monday to resume supplies. The fuel shortage is “a sign of a poor management which will disappear very soon,” former Nigerian President Olusegun Obasanjo said in an interview in Abidjan. “We should not worry about it. It’s an aberration. An aberration comes and goes.”

Meanwhile MTN Group, said yesterday that its Nigerian services continued to be hampered despite the end of a fuel strike on Monday. Nigeria, its biggest market, has been suffering acute petrol, diesel and aviation fuel shortages for the last few weeks due to a strike by marketers and distributors over non-payment of subsidies by the government.

Nigeria subsidizes petrol and must import the bulk of the 40 million litres a day that it consumes owing to a neglected refining system. A dilapidated and grossly inadequate power grid means businesses and households depend on diesel for electricity. “Diesel is still not easily available at this time in spite of the end of the fuel strike. It is likely to take some time for normality to be restored,” Funmilayo Onajide, a spokeswoman for the company, said.

Other local telecoms operators also warned customers of reduced services and banks said they would start closing their branches early from Monday.

Airlines, particularly Arik Air, have been forced to cancel or delay domestic flights. With an impending change in government on May 29, stakeholders across the fuel supply chain were concerned that the incoming government may not payout the remaining subsidy debt.

Marketers said they were owed around $1 billion.
Most importers stopped bringing in tankers and depots were shutdown to deprive retailers of the gasoline and diesel to put pressure on the finance ministry. President-elect Muhammadu Buhari is expected to closely review the subsidy scheme, which was revealed to have paid out over $6 billion in fraudulent claims in 2012.
*Gabriel Omoh with Agency reports

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