In Nigeria, airline operators have confirmed their procurement of Jet A1 fuel from the Dangote refinery, marking a significant strategic shift in the aviation fuel supply chain of the country. Prof. Obiora Okonkwo, spokesperson for the Airline Operators of Nigeria (AON), stated that AON began purchasing Jet A1 from Dangote several months prior. He elaborated that the fluctuating costs of Jet A1 fuel are influenced by various factors, notably geographical location and market conditions. This variance in pricing underscores the complexities involved in fuel procurement for airlines operating in Nigeria, where costs can dramatically differ from one airport to another.
Industry insiders have indicated that the high prices associated with imported Jet A1 fuel have compelled stakeholders to explore local sourcing alternatives. One anonymous official remarked on the increasing financial pressures posed by imported fuel, prompting discussions with Dangote to establish a more cost-effective supply chain. The focus on local sourcing is driven by the belief that procuring Jet A1 from a domestic refinery would alleviate the burden of high import costs, thereby stabilizing prices and ensuring supply continuity. The initiative reflects a broader industry trend towards self-sufficiency, particularly in the face of global supply chain disruptions that disproportionately affect developing nations like Nigeria.
However, discussions regarding the specifics of the arrangement have been complicated, particularly due to an ongoing disagreement between Dangote and the Nigerian National Petroleum Corporation (NNPC). This dispute has created a stalemate, preventing Dangote from providing concrete feedback regarding the supply deal with airline operators. An industry official explained that while there was a proposed price for the Jet A1, it remains provisional and is contingent upon resolving the underlying conflicts with NNPC. Without clarity on pricing and strong partnership terms, the procurement of fuel is currently fraught with uncertainty, complicating planning for airline operational needs.
Quantitative discussions regarding the amount of Jet A1 fuel needed in the aviation sector have stalled as well. The demand for Jet A1 is inherently variable, depending on operational capacity, including the number of aircraft in service at any given time. An official highlighted that daily fluctuations could significantly impact fuel needs; for instance, having eight aircraft in operation one day and only six the next translates into varying fuel consumption requirements. This unpredictability underscores the need for agile and flexible supply chains that can adapt to the operational realities of airlines.
The Federal Government of Nigeria has recently taken decisive steps to streamline the supply of aviation fuel, with the approval of Dangote Refinery as the exclusive supplier of Jet A1 for airline operators. Minister of Aviation and Aerospace Development, Festus Keyamo, confirmed this monopoly, which is intended to stabilize the market and simplify the procurement process for airlines. By designating Dangote as the sole provider, the government aims to ensure predictability in fuel pricing and availability, thereby fostering a conducive environment for the growth of Nigeria’s aviation sector.
Additionally, this strategic move comes in the wake of the Federal Government’s initiation of a naira-for-crude agreement with Dangote and other local refiners. This agreement signals a broader commitment to bolstering local refining capabilities and reducing reliance on imports. By enhancing domestic fuel production, Nigeria can improve its energy security and create a more stable market for airline operators, paving the way for a more robust aviation industry that can better absorb external shocks and fluctuations. Overall, the partnerships between airline operators and local refineries, particularly Dangote, could represent a transformative step in the Nigerian aviation sector’s approach to fuel sourcing.
