Airline Operators of Nigeria, AON, described a graphic picture of how major oil marketers are shortchanging them with the cost of aviation fuel, also known as Jet-A!.
Appearing before the special committee, led by the speaker of the House of Representatives, Femi Gbajabiamila on Monday, the Vice President of AON, Mr. Allen Onyema, who is also chairman of Air Peace, said that they were denied the delivery of 25,000 metric tons of fuel approved by President Muhammadu Buhari
This was to be sold to them at the landing cost but Onyema accused the NNPC and some marketers of ripping them off.
Consequently, he said they were asked to nominate 10 marketers they could trust to enable them handle the transactions.
Onyeama told the committee of how his association was invited by the Nigeria Midstream and Downstream Regulatory Authority, NMDRA, to notify them of the President’s gesture.
He also said that while he alerted the NNPC GMD, Mele Kyari, informing him of the President’s gesture and their selected marketers, the response he got was not friendly.
“We were invited by the Midstream and Downstream Authority and we were told that the President approved 25,000 metric tonnes for us as a palliative to help us. We were very grateful to the president.
‘’It was not free. We were happy. We were told to nominate marketers that would market this product for us. We were told to have a meeting with these marketers. We called all the marketers, we held meeting with them.
‘’We decided the logistics, so they would take their logistical costs and everything and at the end of the day that fuel was getting to them, they told us at N335, so we put everything together and it would be getting to less than N400 for the cost and we said even if they sell to us at N450, it would be okay.
“We were told that a week later that the consignment would be arriving Nigeria but the next thing we heard from the marketers was that they had already been given the consignment that we were all jostling for. So we waited, thinking that they would sell as agreed. They never did.
“I actually called the MD of NNPC in the presence of our members. We wanted to hear from him. He answered that there was no way they would leave us to get the product directly, that it was dangerous.
‘’But I said no, that the marketers you are going to give are the same marketers that would handle it for us. He said he did not want any crash or anybody adulterating it. I said how could they adulterate it because they are the same marketers.
‘’We are not taking it on our own. Long and short of the story is that this product was not given to us and we noticed that it continued rising and rising,” he said.
Also speaking at the forum, President of the Association, Abdulmanaf Yunusa, who’s also the Chairman of Azman Air, corroborated the allegation, saying NNPC denied them the allocation approved by the president.
But Kyari, who put up a stout defence for the marketers, said his refusal was hinged on safety issues, stressing that releasing aviation fuel directly to operators, or even marketers was risky.
“Mr speaker sir, it is more complex than they say. Somebody must handle aviation fuel. We cannot surrender the safety of Nigerians to just anyone. It is not every marketing company that can handle ATK, including the chairman’s company. ’We cannot give him. He has marketing company. We cannot give ATK to handle. That is why they have to bring the people that we can deal with,” he said.
In his presentation, NNPC GMD, Mele Kyari, said it was difficult to have a fixed price of the product, saying “we agreed that we make the marketers sell the product to them at N500 for three days pending the day they would sit down and agree on this pricing formula. ‘’I confirm that between us the and the downstream authority they had sat down and engaged and agreed on a pricing structure.
“Needless to say there is no fixed price. This is a deregulated product. So you cannot hold unto any price and indeed what you have seen in the media is N700 reference point. It cannot be a reference point. It depends on the market condition. It can be higher than N700 depending on the market. This markets shifts. As we speak it is closely related to the price of crude oil.
“There is no way the oil matters, I am speaking for them now, if you own me N1 billion. I would not give you credit. No one would do this. There are limits to credits.
“It is our role to ensure we intervene. We did. We brought in products so that we can dampen the price. In March and April, we brought in cargo and made it available to the entire industry at N460. there is a build up to that price. When the customer takes marine N435, he has to transport, he has to charter vessel, bring it to his depot, to his fuel station and transport it. So there cannot be two same price in Lagos and Maiduguri.
“We cannot fix price. We cannot ask for N500. we cannot say it must be below N600 or N700. That is why we insisted they go and have a formula that is transparent that each one of us can see.
“The only way we can have fixed price is if we put subsidy on. You can say it can sell for N500 in any circumstance, then somebody has paid for that difference. I am not sure this is what we are doing.
“There is an FX constraint. There is limit to what the CBN can provide. We are constrained because we are not able to produce dollar because of the dearth of oil in the Niger Delta. This is then reality. So we do not have. That means customers must source for FX from alternative sources,” he said.
Similarly, the CBN governor, Emefiele who responded to the an earlier concern of the operators of not accessing foreign exchange, said there was none to sell, adding that it was only when the NNPC exported products that it could get foreign exchange.
“The availability of FX is very important and the issue of constraint from FX arising from issues bordering on theft in the Niger Delta is a big issue. It is when NNPC is able to export that dollars can come in.
“We do not have FX to sell. It would be difficult for us to grant any concession. It means we would be taking a hit or we would be providing some sort of subsidy for the industry,” he said.