5 February 2018

Nigeria: Zero Refining Capacity Costs Airlines 500 Million Litres Fuel Shortage Yearly

Perennial zero refining capacity of aviation fuel in the country has brought the supply deficit of the total Jet-A1 requirement a year to 500 million litres.

While the demand for aviation fuel, according to industry sources, continue to increase and estimated to have reached one billion litres last year, 100 per cent dependence on fuel importation amid foreign exchange challenges met only half of the potential demand in 2017.

Consequently, limited supply has pushed up the cost of fuel to between N205 to N275 for local operators. And to beat the shortage and cost, foreign airlines source for top up at Accra, Lome and Abidjan airports, after dispatching or picking passengers in Nigeria.

National Vice Chairman of Aviation Fuel Marketers Association of Nigeria (AFMAN), Olasimbo Betiku, said the main problem facing aviation fuel supply is the lack of local refining capability to complement importation, which is also challenged by dollar availability.

Betiku at the presentation of a new partnership between CITA Petroleum and Puma Energy to stakeholders in Lagos at the weekend, said, the potential of the Nigerian market is up to one billion litres annually and in 2017, the country was only able to use half of that capacity.He observed that in the last 18 years, passenger traffic has steadily risen with increase in flight operations, but very little solution by way of local refining capacity.

He added that while the one billion litres fuel requirement has not been met, the industry will face more shortages by 2030 when the traffic would reach 20 million, needing two billion litres fuel consumption according to the International Civil Aviation Organisation's (ICAO) projection.

Chief Executive Officer of CITA Petroleum, Dr. Thomas Ogungbangbe, said the last two years was indeed most challenging for importers, with the scarcity of dollars for aviation fuel supply.

"We could not take money from banks in Nigeria to fund transactions, and even when there was money, there was no forex to import product. At this point, it appeared to us that it was likely that conditions may remain as tough or will get even tougher still.

"With this constantly changing market, there is need to plug into dynamics of well integrated organisations whose system is not thrown to shocks by economic situations of any one country or region. I strongly believe it's even more important - now while we're enduring an economic crises - that our companies fully utilise the benefits of this type of business relationship."Therefore, this formal launch of the relationship between PUMA and CITA, is coming at a very auspicious time, for the airline customers and the country. It can only result in a win-win consequence for all."

The new deal is expected to create supply and availability to tackle the perennial shortage and distribution logistics challenges affecting the nation's aviation sector.Puma energy is one of the biggest suppliers of jet fuel in the world, with fingers in refining, retailing and other aspects of energy chain. Puma is also part of a parent company called Trafigora Group.

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