Following threats by the Airline Operators of Nigeria (AON) to stop flight operations, the Nigeria National Petroleum Corporation (NNPC) has reached an agreement with the airline operators to subsidise flights for the next three months, in order to keep the aviation sector afloat.
The agreement was reached following the intervention from the House of Representatives on Monday, 9th May, in a meeting presided over by the Speaker of the House, Honourable Femi Gbajabiamila. In his remark at the meeting, he stated that the stakeholders had reached a four-point agreement.
First, Gbajabiamila noted that the carriers had agreed to call off the proposed withdrawal of services. Second, the agreement involves NNPC supplying Jet-A1 fuel to ten marketers nominated by AON, for a period of three months at N480/litre, pending when the carriers would be granted licences to import the commodity.
The third resolution, according to him, is that, “in the long term, you commence the process of applying for your own licence to be able to import your own Jet fuel. So, that will remove, whether it is middlemen or frontmen or whatever. You will know the landing cost to assist you in your business. Have we agreed on that? We have agreed on that”.
Gbajabiamila continued, “According to the CBN governor, there are six million litres available now at N480. You will get an allocation in the next three months through the companies (marketers) that you have nominated so that you would not come back and say jet fuel is now a certain amount and it is the fault of the NNPC. You have nominated those people that are selling to you.”
In the process of applying for licence, the Speaker said the midstream agency should as much as possible grant waivers that would not touch on the security and safety of the process, while urging the committee chairmen on aviation and downstream to follow up.
The Group Managing Director, NNPG, Mele Kyari, stated that it was agreed at an earlier meeting to make the marketers sell the product to them at N500 for three days pending the day they would sit down and agree on the pricing formula.
According to Kyari, “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”.
He said the only way to fix the price is to put a subsidy on adding that to sell for N500 in any circumstance, then somebody has to pay the difference. Kyari further added that there is a ForeX constraint: “There is a limit to what the CBN can provide. We are constrained because we are not able to produce dollars 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.”
In line with this, the Governor Central Bank of Nigeria, Godwin Emeifile said: “The availability of Forex is very important and the issue of constraint from Forex 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”.
Speaking on behalf of AON, the Chairman of Air Peace, Allen Onyeama stated that the operators were not striking, but they are fighting to save a very crucial industry being bogged down by unnecessary bottlenecks.
Onyeama said: “We did not intend to go on a strike. It was not a strike. What the AON was saying on Friday when we released our communique was that we do not have the money anymore to pay.
Even spare parts, sometimes you take the spare parts and pay later, not to talk of aviation. You don’t have to carry loads of naira in your cargo hold to pay. We all owe these marketers, yes, but we are servicing them. What we are doing actually, is that we are fighting for this government and the poor masses of this nation. We are subsidising ticket fares at N50,000.”
The meeting also agreed that the House Committee on Aviation should be part of the further talks between oil regulators, aviation regulators and the airline operators.