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Between Airlines, Marketers and Politics of Fuel Scarcity

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By ISAAC OLUSESI isaacolusesi@gmail.com

Don’t hold your breath for it. The airline operators in Nigeria had alleged that marketers were hoarding aviation fuel and caused artificial scarcity of the product as the jingle bells with lyrics, sound jingly, announcing it’s festive season with transportation worst hit by traditional hikes in fares.

Not strangely, the Airline Operators of Nigeria (AON) under the aegis of Nigerian Civil Aviation Authority (NCAA) were like issuing threats to shut down services, inauspiciously this festivity, cited scarcity of aviation fuel and hinted that “the passengers should expect possible flight disruptions,” cancellation and delay in terms due to the “scarcity of aviation fuel, shortage of foreign exchange and rising oil costs.” But not without threats of fire and brimstone when NCAA said, “if the aviation sector were to crash today, many other sectors of the economy would stop operations in a matter of time.” According to the operators, the scarcity of aviation fuel implies to them huge chunks of operation costs, and they are browbeaten to being taken over by the Assets Management Corporation of Nigeria (AMCON), with warning from NCAA to stop any airlines that cannot refuel and operate safely.

But with schools closed and families set to travel for Christmas and new year festive celebrations, the posture of the airlines operators, forth and back at every festive rush, has more to it than meet the eye, the politics of the survival of the fittest to make more money in order to recover losses incurred across the outgoing year and repay the bank loans used to buy regional aviation airplanes that cost between $80million to over $200million. While there’s no justification for any arbitrary hike in flight fares, this festive season, allegedly attributable to airliners’ claims on scarcity or shortage of aviation fuel, substantially stored in the aircraft wings designed to maximize fuel capacity for propulsion.

Wait a bit. Dr Thomas Olaleye Ogungbangbe, CITA Group Managing Director and Chief Executive Officer (CEO) and pioneer Chairman, Aviation Fuel Marketers Association of Nigeria (AFMAN) spoke on the high brow Channels Television programme: ‘Addressing Aviation Fuel Scarcity, Proffering Solutions.’ He flayed any possible hikes in air flight fares, resulting from the alleged non existing scarcity of aviation fuel, insisting, “I can tell you without making any enquiry or seeking clarifications from anybody that the scarcity of aviation fuel cannot be true. If any airline is not getting fuel, then the relationship between the airline and the fuel marketing company must be sized up, sifted or appraised.

“How would marketers have fuel and not wanting to sell? As aviation fuel marketers, we are ethical companies of impregnable integrity and transparent honesty, and at all times, fully conscious of our social corporate responsibility.” Ogungbangbe, the AFMAN’s former chief executive and experienced world-class business manager, stated. He has on his page the Nigeria Midstream and Downstream Petroleum Regulatory Authority (NMDPRA)’s assertion that the country has an excess supply of aviation turbine kerosene (ATK), also called aviation fuel. NMDPRA says, the country has thirty four days, or thereabouts, sufficiency of aviation fuel, dismissing the airline operators’ averment to aviation fuel scarcity, as unfounded. And Nigerian National Petroleum Company Limited (NNPC) said, “there is enough supply of the product. Yes, it might be in the wrong hands or wrong places. We are going to do everything we can to address the situation.”

By the writer’s understanding, the aviation fuel marketers, elitist companies, have always known, they are in the public eye that gets their corporate ethics and attitudes scrutinized, particularly on business transparency and fairness, business leadership and integrity, business and environmental concerns, and business and philanthropy in ways that benefit the society, boost the morale of the company employees, improve company’s overall reputation and increase productivity for impact on the company’s profitability.

The AFMAN’s skills and initiatives in social and environmental impact, have consistently, the most effective way, addressed issues in corporate social responsibility and engage in responsible business practices such that mostly in the public interest, the values, trust and commitment of the aviation fuel marketers have violated profit maximization objective of the business as economic activity, but contribute to the nation by sustainable growth and development supports, constantly, to the society for improved well being and tacklement of socio – environmental challenges.

Responding to questions from a crew of the press shortly after the television programme, Ogungbangbe, who had navigated the nation’s private sector, particularly, banking, pharmacy, oil and gas industries, said, “the properly executed corporate social responsibility (CSR) is in the ascent daily at CITA, aviation fuel company in West and Central Africa, improving the business image as it preserves potential workers, enhances values and earning, advertises the company brand name, attracts investments, and reduces risks,” adding, that “our deliberate and penetrating commitment to social responsibility has got us into the good publication of petroleum regulatory authorities.”

CITA aviation fuelling company is an household name in aviation fuel marketers’ corporate social responsibility drive. “At CITA, and indeed, generally, at FMAN, all marketers of aviation fuel, social corporate responsibility requires us to conduct our business transparently and profitably in line with the provisions of law. And that, we exactly do,” said, Ogungbangbe, the Prince of the reigning Ajagbusi Ekun Ruling House of Iloko Ijesa, Oriade local government council area of Osun State.

Asked to comment on what the government could do to stabilize the supply of aviation fuel, Ogungbangbe, who commended the position of NNPC Limited on the matter, explicitly said, “please, let me state for the umpteenth time that the aviation fuel marketers have not hoarded, or stockpiled aviation fuel in anticipation of price increase to have prompted the phenomenon of fuel scarcity, professed by the airlines operators.

“Whatever it is, the challenges posed in the foreign exchange market by the unstable value of naira against other currencies to import fuel, firming up of oil prices on the international market, existence of parallel markets, also called black markets, everywhere in the world, the factors combined are a reason for aviation fuel shortage and such umpteens as difficulties in the distribution of fuel, including corruption, the offshoot of global cost of living crisis, and inadequate domestic refining capacity are a dominant element that could necessitate aviation fuel scarcity or shortage.”

The airlines group, rather has politics up its sleeves, not fuel scarcity, to get the aviation fuel subsidized, exceptionally, by the government. That’s the airlines operators in commercial politics to pressure the government to have the price of fuel controlled by subsidy and still, desiring to have the airfares increased this festive season by laying claim to aviation fuel scarcity. It’s the operators, asking specifically for a price control act, the Olusegun Obasanjo’s 1977 kind that formalized petroleum subsidy in Nigeria.

For what it is, the airlines operators, wanting to re- perpetrate corruption associated with fuel subsidy payments are won’t want the nation to generate budget surplus in the foreseeable future as against budget deficit, reduce government borrowing and have the country’s financial resources freed up for other sectors of the economy, or for the development of the critical public infrastructure. I recommend that government should carefully evaluate the claim of the airlines operators.

And on fuel stability, Ogungbange noted, the gap between the international market and parallel markets should get abridged but quickly stated that attaining total abridgement could be operationally difficult. “Any sustainable close margin or narrow gap is as good as arriving at near stable or sustainable aviation fuel supply, enough to guarantee business survival,” he said.

And true, the aviation fuel stability will greatly be helped by the announcement recently, that Aliko Dangote’s petroleum refinery in Lagos will begin in January, 2024, the production of aviation fuel, other petroleum products to the tune of 650,000 barrels per day, with the nation’s huge crude oil reserves found enough to meet the local demand for aviation fuel. And the Port Harcourt old and new refineries, with products to include aviation fuel, will on completion, produce 650,000 barrels per day.

Still on fuel stability, Ogungbangbe, Nigerian petroleum stakeholder and advocate of ‘fix our refineries and remove fuel subsidy’ noted, the more the refineries, the better for the nation. “The chemistry of the refineries is the same with the crude distillation that produces diesel also produces aviation fuel but the density is the only difference,” Ogungbangbe said. He urged the relevant government agencies to get the locally produced aviation fuel certified in no time to have his Aviation Fuel Marketers Association (AFMAN) market the product.

It’s good news that the nation will be having more functional refineries to embrace technological innovations in the sector, reduce the costs of importing petroleum products and cause prices to fall, the products, being locally produced should be locally priced. How much the product market get foreign exchange at the international market with how much they are sold at the parallel markets should attract official attention and action, but premium should be put on the market forces of demand and supply, and not selling to the highest bidders.

OLUSESI writes via isaacolusesi@gmail.com

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