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No Quick Fix for Jet Fuel Shortage in Nigeria

Source: Reuters 12/21/2016, Location: Africa

Nigeria is trying to import more jet fuel but air travelers tired of delays must be patient as a shortage of foreign currency will continue to hurt the airline industry, the minister of aviation said. "The flight has been delayed due to a scarcity of aviation fuel," has become a standard announcement at Nigerian airports, where passengers spend much of the day waiting as the recession-hit West African nation struggles to buy jet fuel in from abroad.

Most domestic flights have been delayed for hours or cancelled in the past two weeks, with airlines unable to get jet fuel and, due to the subsequent loss of business, struggling to pay staff. Unions grounded the biggest local carrier, Arik Air, for one day on Tuesday over unpaid salaries. Hadi Sirika, the minister of state for aviation, said that the central bank was releasing more hard currency but that fuel importers were competing with health, education, transport, social services and security agencies which also need dollars.

"I was in the central bank three times since I became minister, soliciting for foreign exchange, and they have started to give airlines foreign exchange," he told Reuters late on Tuesday. "The major challenge is that we have a foreign exchange issue." Nigeria's foreign exchange reserves have dwindled as low oil prices have reduced a crucial source of dollars, pushing the country into recession. Oil accounts for 90 percent of Nigeria's foreign exchange. "While this recession will last and while this problem of forex availability will last, we'll have to appeal to Nigerians and other people that pass through our airports to exercise patience and be aware of the situation," the minister said.

Sirika said that Nigeria's derelict refineries in Port Harcourt, Warri and Kaduna would soon resume jet fuel production as the state oil firm was overhauling them. "They have the capacity to refine A1 (fuel) but they have long stopped doing that. The petroleum resources ministry and NNPC have assured us that they will resume production of Jet A1 - that is for the long term," he said.

The central bank on Monday launched a special foreign exchange auction to provide dollars to airlines and fuel marketers. State oil firm NNPC said on Monday it would be releasing 26 days of aviation fuel to "forestall shortage". But a Lagos-based fuel trader said jet fuel shortages would probably continue until January due to demand for tickets during the festive season. The government's priority is to give hard currency to gasoline importers to avoid queues at petrol stations, he said.

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