Diesel, Jet A1: MAN, Airlines, Dangote In Talks
Local airlines under the aegis of the Airlines Operators of Nigeria and local producers on the platform of the Manufacturers Association of Nigeria have begun plans aimed at getting Dangote Petrochemical Refinery to priotise diesel and JetA1 supplies to local carriers and manufacturers.
The move came about one week after indication emerged that the Dangote refinery’s diesel and aviation fuel would hit the market by January 2024. This was after about one million litres of crude oil was supplied to the facility.
Months earlier, the Dangote refinery had hinted that refined petroleum products would from the facility be sold in the international market.
But in a chat on Sunday, the Chairman of United Nigeria Airlines and spokesperson for AON, Prof. Obiorah Okonkwo, said local carriers had begun talks with the management of the refinery, expressing hope that the talks would be fruitful.
“We are talking with him and hope that it will be fruitful,” Okonkwo said while responding to an enquiry on whether local airlines had plans to begin talks on JetA1 supply with the Dangote refinery.
Also, MAN said its members were meeting with the aim of coming up with a position for possible presentation to the Dangote refinery management.
MAN President, Francis Meshioye, said that the association was meeting to determine whether an arrangement would be made with Dangote Refinery on the supply of diesel to its members.
He said, “We are trying to get a proper position…maybe in two days we will meet and have a proper position on this.”
In its Half Yearly Economic Review, published recently, MAN said its members spent about N60.4bn on alternative energy sources in the first half of 2023.
Meanwhile, findings revealed that expenditure by manufacturers on alternative energy sources (excluding power from distribution companies) jumped by 82 percent, from N25bn in 2014 to N144bn in 2022.
This is according to data collated from the annual and bi-annual reports of the Manufacturers Association of Nigeria.
According to the documents, manufacturers spent about N783bn during the period to self-generate power to augment the insufficient power supply from power distribution companies to power their factories
There has growing apprehension in the manufacturing and aviation sectors that the rising costs of diesel and aviation fuel will lead to the total collapse of more industries and airlines operating in the country.
Across the states, the MAN said recently that many factories were closing down because of the rising cost of diesel.
The national body of the association warned that more factories would be shut if the diesel price increased to N1,500 from the current N1,000.
Between June and October this year, the prices of diesel and aviation fuel increased by over 50 per cent, heightening concerns among the operators.
Meshioye, in July, said that members of the association spent between 35 percent to 40 percent of their total costs on energy needs.
In the aviation sector, experts have predicted a sharp rise in local airfare due to the surge in the price of aviation fuel, also known as Jet A1 and foreign exchange.
Speaking on behalf of the Airline Operators of Nigeria, Capt. Roland Iyayi, noted that Nigeria currently stands a better chance of driving an alternative fuel for the aviation sector through the exploration of palm oil.
The Chief Executive Officer, Belujane Konzult, and former spokesman for the defunct Nigerian Airways, Chris Aligbe, said Jet A1 was the highest single cost factor in airline operation, adding that it would have a terrible impact on airline operations.
He, however, stated that this would result in increased airfare as the burden would be shifted to the passengers.
Aligbe said, “Fuel is the highest single cost factor in airline operation, so, when we have such things skyrocketing, the airlines will be in a very terrible situation.
“They will take a beating and transfer the cost to the passengers, otherwise, they won’t survive. No one expects the local airlines to bear that burden without passing it on to their passengers. That’s the situation we find ourselves in.”
Meanwhile, the production of Automotive Gas Oil, popularly called diesel, and JetA1 or aviation fuel, from Dangote Petroleum Refinery in January 2024 is going to be supplied to domestic airlines and industries operating in Nigeria, it was gathered on Sunday.