Marketers increase cost of goods following fuel hike

Airlines, minister bicker over planned fare review

DESPITE the deregulation of aviation fuel, otherwise known as JET A1, oil marketers have adjusted the price of the commodity from N160 to between N175 and N185 per litre.

Outside Lagos and Abuja, the commodity sells for about N200 per litre.

However, a fresh crisis may be brewing between domestic airline operators and the Minister of Aviation, Mrs. Stella Oduah-Ogiewonyi, over the hike in the pump price of Aviation Fuel (JetA1) from N162 per litre to N175.

Meanwhile, pharmacists, under the aegis of Pharmaceutical Society of Nigeria (PSN), have predicted 50 per cent rise in the prices of drugs following the withdrawal of fuel subsidy.

The PSN said “a thorough evaluation of the possible impact of the subsidy removal on the pharmaceutical sector predicts at least a 50 per cent hike in the cost of basic drugs in Nigeria in the weeks ahead if the subsidy removal is not reversed”.

The Guardian had exclusively reported last week that oil marketers were already planning to further increase the pump price for airlines; a situation that could automatically lead to rise in airfares.

Apart from the rise in airfares occasioned by the subsidy removal, the cost of operations to airlines makes the idea of increase in fares inevitable.

JET A1 had long been deregulated, but many had reasoned that major oil marketers had formed a cartel. Since the price of aviation fuel is not controlled by the government, they could also be forced to increase it to make sure that the price is not at par with that of PMs, which sells for N141 per litre.

The operators were jolted when oil marketers told them last Friday that the product would be sold at the new rate and could be above N175, depending on the location of sale.

However, in a pre-emptive move, the Aviation minister, it was learnt, directed that the airlines must not on this premise adjust their airfares upward. At the moment, an hour flight goes for between N25,000 and N32,000. Airfares could now go up as high as N80,000 for return ticket for an hour flight to places like Abuja, Port Harcourt, Owerri, while over an hour’s journey could rise to N50,000.

The Assistant Secretary General of Airline Operators of Nigeria (A0N), Mohammed Tukur, said there would definitely be an adjustment in the price of air fares but was silent on what it would be.

He noted that both the Nigerian Civil Aviation Authority (NCAA) and the Ministry of Aviation would find it very difficult to prevail on the airlines on the issue, adding that the cost of doing business would be enormous on them.

The PSN in a press statement signed by its National President, Azubuike Okwor, said this is traceable to increases in running costs for machinery and equipment, machines, vehicles and overall logistics plan related to professional handling of drugs by manufacturers, importers, distributors and retailers providing another window of opportunity for faking of genuine medicines.

The pharmacists said they also see more agitations for wage increases by various cadres of personnel in the sector, who would be genuinely seeking to cushion the distress that this policy would foist on them.


By Wole Shadare and Chukwuma Muanya

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