Why Airlines May Not Get Cheaper Jet Fuel Despite Local Production

CITA Energies says Nigerian airlines may not see a significant reduction in Jet A1 prices despite local production, citing a single-source supply arrangement, differing pricing methods and rising operating costs. Its chairman, Thomas Ogungbagbe, said marketers use a global formula based on the previous month’s average, while Dangote Refinery applies a different formula and adds a premium that CITA considers unjustified. The refinery has helped end aviation fuel shortages in Nigeria, but airlines continue to complain about fuel costs, which account for at least 40% of their operating expenses. CITA is urging Dangote to remove the premium, which leads some marketers to prefer imports.