KEY POINTS
- Despite Dangote refinery reducing Jet A1 ex-gantry price to N1,650 per litre, retail prices remain high at N1,900–N2,000 across major cities.
- Airlines continue to struggle as high aviation fuel costs force reduced flight frequencies and increased operational pressure.
- Stakeholders blame logistics, forex issues, old stock, and pricing margins, while calling for stronger regulatory oversight to ensure price transparency.
Despite a recent reduction in the gantry price of aviation fuel, Jet A1, by the Dangote Petroleum Refinery & Petrochemicals, airline operators and passengers across Nigeria are yet to feel any relief, as retail prices of the product remain stubbornly high across the country.
The refinery had announced a reduction in the ex-gantry price of Jet A1 from N1,750 to N1,650 per litre. The move was presented as part of efforts to ease the financial burden on airlines, stabilize fuel supply, and improve efficiency in the aviation sector.
In addition to the price cut, the refinery also introduced a 30-day interest-free credit facility backed by bank guarantees for marketers and airline operators. It also shifted from a dollar-based pricing structure to a naira-denominated model, a policy change expected to reduce exposure to foreign exchange volatility.
However, despite these interventions, market reality has not aligned with expectations. Jet A1 continues to sell between N1,900 and N2,000 per litre in cities such as Abuja and Kano, while Lagos prices range between N1,910 and N1,925 per litre. This persistence of high prices has raised concerns among stakeholders who expected immediate downward adjustments following the refinery’s announcement.
Industry observers note that even after the price reduction, some fuel marketers reportedly adjusted their rates upward, citing rising ex-depot costs and logistics challenges. One marketer, in a communication to an airline customer, explained that the review was necessary due to ongoing volatility in the petroleum products market, including transportation costs and supply chain pressures.
The continued high cost of aviation fuel has placed significant strain on domestic airlines. Several carriers have already reduced flight frequencies in response to rising operational expenses, while others continue to operate cautiously amid fears of further price instability.
The Airline Operators of Nigeria (Airline Operators of Nigeria) had earlier threatened a shutdown of operations due to escalating fuel costs but suspended the plan following government intervention and stakeholder engagements involving regulators and fuel suppliers.
Regulatory agencies such as the Nigerian Midstream and Downstream Petroleum Regulatory Authority and the Federal Airports Authority of Nigeria have attempted to stabilise pricing through recommended price bands and operational oversight. The Nigerian Civil Aviation Authority also continues to oversee aviation safety and operational standards amid the ongoing fuel crisis.
Despite these efforts, operators argue that the gap between announced ex-depot prices and actual retail rates remains difficult to justify. Some stakeholders believe that profit margins and additional logistics costs imposed by marketers are contributing to the sustained high prices.
Aviation analysts say several structural factors are preventing the immediate transmission of lower prices to end users. These include transportation and storage costs, foreign exchange volatility, taxes, and the presence of older stock purchased at higher rates before the price reduction. Additionally, aviation-specific handling charges from regulatory and airport authorities continue to influence final pricing.
Industry experts warn that unless there is greater transparency in the pricing structure, the intended benefits of the refinery’s price cut may not reach airlines or passengers. Some have called on the Federal Competition and Consumer Protection Commission (Federal Competition and Consumer Protection Commission) to investigate the pricing margins applied by marketers to ensure fairness and prevent potential exploitation.
An aviation consultant noted that with the current ex-gantry price, retail costs should ideally be lower once logistics and minimal margins are factored in. He argued that closer regulatory scrutiny is necessary to ensure that consumers are not overcharged within the supply chain.
Meanwhile, the broader global context has also influenced fuel prices, with disruptions in international oil supply chains contributing to volatility. This has further complicated efforts to stabilise aviation fuel prices within Nigeria’s domestic market.
As the situation stands, airlines continue to operate under financial pressure, with concerns that sustained high fuel costs may force further route reductions, flight cancellations, or increased airfares if no significant relief is achieved soon.
