19 December 2016, Lagos – The failure of the Central Bank of Nigeria to make foreign exchange available despite promises has further worsened the scarcity of aviation fuel, leading to multiple problems for airline operators, OKECHUKWU NNODIM writes
The chronic scarcity of aviation fuel, popularly known as Jet A1, which has dragged on for several months, has grown worse in the past three weeks mainly as a result of the inability of the Central Bank of Nigeria to provide foreign exchange to importers despite many promises to do so.
According to oil traders and operators in the airline business, the CBN, in its bid to avert the scarcity of petroleum products during the Yuletide, asked banks to submit bids for a “special currency auction” on December 5, 2016, which targeted fuel importers in order to meet the demand for imports.
They noted that prior to the request, the apex bank had suspended the provision of the United States dollars needed by the oil dealers for the importation of refined products
Traders had explained that the CBN sent a message to the banks to submit backlog of dollar demands from fuel importers around 3pm on December 5 for the special intervention.
Fuel shortages often occur across the country during festive periods such as Christmas, New Year and Muslim holidays.
Traders said the government wanted to ensure that fuel retailers had enough products, so it decided through the CBN to channel dollars to the importers and also to avoid shortages, which in May crippled banking, airline and telecom services.
They, however, could not tell at what rate the central bank was to sell the dollars.
But three weeks after the supposed intervention by the CBN and compliance by some banks, it was gathered that no oil marketer had received any forex.
This, according to operators in both the aviation and oil sectors, has further worsened the chronic scarcity of Jet A1 in the past two to three weeks.
It was, however, learnt that the Federal Ministry of Petroleum Resources and the Nigerian National Petroleum Corporation had to swiftly intervene in order to avert the cancellation of flights on a larger scale by domestic airlines as a result of the scarcity of aviation fuel.
The Executive Secretary, Major Oil Marketers Association of Nigeria, an umbrella body of some petroleum products’ importers, Mr. Obafemi Olawore, told our correspondent that forex accessibility was still an issue affecting the importation of products.
When reminded of the special intervention by the CBN and asked if the marketers had started accessing forex based on the apex bank’s promise, he replied, “We don’t have it.”
“Let the CBN know that we don’t have it. What we are using to carry out importation of products is the intervention put in place by the Petroleum ministry and, of course, the NNPC,” Olawore added.
Domestic airlines had revealed last week that the oil marketers were not importing Jet A1 due to the lack of forex and that this had prompted the cancellation of many flights.
Nigeria’s biggest commercial airline, Arik Air, had alerted passengers to the worsening aviation fuel supply situation, leading to flights delays and cancellations at airports across the country.
“Arik Air has been operating over 100 daily flights and, therefore, experiences a larger impact of this scarcity compared to other airlines. The airline requires a daily supply of approximately 500,000 litres for its operations, but it has been getting between 180,000 and 200,000 over the past 10 days, which has severely impacted the scheduled flight operations,” the airline’s spokesman, Adebanji Ola, said in a statement.
But the MOMAN executive secretary assured the flying public that the scarcity of aviation fuel was being addressed as a shipload of Jet A1 had arrived Nigeria, adding that another was being expected.
Olawore said, “As of Saturday, there’s aviation fuel. We had tightness some two, three weeks back; but as we speak, a ship has just discharged the product for us. It discharged about 10 million litres and has actually left the jetty. This week, another ship is coming in for Christmas.
“The problem of scarcity was primarily because of the inability to source foreign exchange for the importation of aviation fuel as of two to three weeks ago. But as of today, we have the product and more is coming, thanks to the managing director and group executive director, downstream, of the NNPC, as well as the managing director of the PPMC.”
Another major marketer told our correspondent that some of the banks had complied with the CBN directive by submitting bids for the special currency intervention.
The marketer, who spoke to our correspondent in confidence, said, “But it may interest you to know that despite the fact that it is now about three weeks after this was done, we have not received any forex in that respect from the CBN through these banks.
“The CBN is frustrating us when it comes to accessing forex, and that is one major reason for the scarcity of aviation fuel. This would have spread further if not for the intervention of the Petroleum ministry and its agencies operating in the upstream and downstream sectors.
“The truth is that there has been no access to forex yet. Aside aviation fuel, I will also want you to know that no marketer is importing Premium Motor Spirit for now. Over 90 per cent of products are through the PPMC, and there are some extraneous issues plaguing the industry right now.”
When contacted, the spokesperson for the CBN, Mr. Isaac Okorafor, did not pick several calls made to his mobile phone.
He also did not respond to a text message sent to him by our correspondent on whether the bank had started making forex available to oil marketers with respect to the request it made on December 5.
However, the Group General Manager, Group Public Affairs Division, NNPC, Mr. Ndu Ughamadu, explained that the national oil firm had to intervene in order to address the issue of Jet A1 scarcity in the aviation sector.
He also noted that the window by which the NNPC supports petroleum importers with forex by pairing them with international oil companies was still open.
In May, the government agreed a deal with the IOCs in the country to sell their dollars directly to fuel importers to end months of scarcity partly caused by a currency shortage after it hiked fuel prices by 67 per cent.
On the scarcity of Jet A1 and what the corporation was doing, Ughamadu said, “The NNPC is also participating in the provision of aviation fuel. Last week, a shipload of ATK by the NNPC arrived and it is going to be a continuous exercise. As you know, the Jet A1 market, like diesel, is deregulated.
“But the emphasis now is on PMS for it is what most of the generality of the populace use. As for aviation fuel, it is deregulated. So, if you have the forex, you can import; and the government has also through the NNPC opened the window where marketers can source for forex by working with big upstream companies.”