- Air Passengers Stranded as Aviation Fuel Scarcity Bites Harder Nationwide
Air passengers in Nigeria are stranded at airports nationwide, as airline operators jostle for aviation fuel, amidst scarcity that is getting worse.
On Tuesday, the passengers, some of whom were on transit, waited endlessly for the departure hall. While few were lucky to later travel, others were later informed that their scheduled flights had been cancelled.
Aviation fuel, otherwise called Jet-A1, is a specialised type of petroleum-based fuel used to power aircraft and normally accounts for over 30 percent of operation cost of an airline.
Jet-A1 is 100 per cent imported into Nigeria and subject to fluctuations in the foreign exchange market. In the last 12 months in Nigeria, aviation fuel has steadily climbed from N104 to N240 per litre in Lagos and as high as N270 in northern part of the country.
Flight delays and outright cancellations means that air travelers are unable to meet scheduled appointments at their respective destinations. In extreme cases, this may also result to huge loss of revenues for those hoping to seal some business deals.
At the General Aviation Terminal (GAT) of Murtala Muhammed Airport (MMA), Lagos, for instance, about three out of every four flights were cancelled, with operators citing “operational reasons”.
The Guardian learnt that one of the airlines operating at the GAT, in fact, cancelled all flights on Monday, and left passengers to learn of the development on getting to the airport.
At the Murtala Muhammed Airport II (MMA2) Terminal, also in Lagos, airlines like First Nation, Med-View, Azman and Dana Air were carrying out services but behind schedule.
A passenger at the GAT, Emmanuel Egboh, told The Guardian that he had been stranded at the airport in the last two days trying to fly to Uyo, Akwa Ibom State.
Egboh said: “This is a flight I had booked since last week. I got here on Monday, only to be told that the flight has been cancelled. No call, no text message, no mail, nothing. Canceled just like that. They said there is no fuel. I’ve been at the airport since morning (Tuesday), the same flight has been delayed for four hours. It is still not certain if we will even fly today.”
Spokesman for Arik Air, Banji Ola, said the airline is the worst-hit due to the huge volume of fuel it required daily to run over 100 flights, but has “drastically been in short supply of the commodity in the last three weeks.”
Ola said that the airline required about 500,000 litres of fuel daily and 150,000 for the Lagos-London operations alone.
He said: “We have not been able to get anything close to the daily requirement and that is why it is affecting us heavily. We are working hard to carry out our schedule and trying to reorganise ourselves to cope with the challenges.”
Aviation fuel marketer, Olasimbo Betiku, explained that the scarcity is due to the lingering problem of foreign exchange hike and scarcity of dollar to import sufficient aviation fuel into the country.
Betiku said t was unfortunate that the government has still not started refining the product at the Kaduna and Port-Harcourt refineries, as promised some months ago, otherwise, Nigeria would not be talking of aviation fuel scarcity by now.
Gold Gained Ahead of Joe Biden Inauguration 2021
Gold price rose from one and a half month low on Tuesday ahead of President-elect Joe Biden’s inauguration on Wednesday.
The precious metal, largely regarded as a haven asset by investors, edged up by 0.2 percent to $1,844.52 per ounce on Tuesday, up from $1,802.61 on Monday.
He said, “The key factor appears to be the (U.S.) currency.”
As expected, a change in administration comes with the change in economic policies, especially taking into consideration the peculiarities of the present situation. In fact, even though Biden, Janet Yellen and the rest of the new cabinet are expected to go all out on additional stimulus with the support of Democrats controlled Houses, economic uncertainties with rising COVID-19 cases and slow vaccine distribution remained a huge concern.
Also, the effectiveness of the vaccines can not be ascertained until wider rollout.
Still, which policy would be halted or sustained by the incoming administration remained a concern that has forced many investors to once again flee other assets for Gold ahead of tomorrow’s inauguration.
Crude Oil Holds Steady Above $55 Per Barrel on Tuesday
Brent Crude oil, against which Nigerian crude oil is priced, rose from $54.46 per barrel on Monday to $55.27 per barrel as of 9:03 am Nigerian time on Tuesday.
Last week, Brent crude oil rose to 11 months high of $57.38 per barrel before pulling back on rising COVID-19 cases and lockdowns in key global economies like the United Kingdom, Euro-Area, China, etc.
While OPEC has left 2021 oil demand unchanged and President-elect Joe Biden has announced a $1.9 trillion stimulus package, experts are saying the rising number of new cases of COVID-19 amid poor vaccine distribution could drag on growth and demand for oil in 2021.
On Friday, Dan Yergin, vice-chairman at IHS Markit, said in addition to the stimulus package “There are two other things that are going with it … one is of course, vaccinations — in the sense that eventually this crisis is going to end, and maybe by the spring, lockdowns will be over.”
“The other thing is what Saudi Arabia did. This is the third time Saudi Arabia has made a sudden change in policy in less than a year, and this one was to announce (the) 1 million barrel a day cut — partly because they are worried about the impact of the surge in virus that’s occurring,” he said.
Also, the stimulus being injected into the United States economy could spur huge Shale production and disrupt OPEC and allies’ efforts at balancing the global oil market in 2021.
Crude Oil Pulled Back Despite Joe Biden Stimulus
Crude oil pulled back on Friday despite the $1.9 trillion stimulus package announced by U.S President-elect, Joe Biden.
Brent crude oil, against which Nigeria’s oil is priced, pulled back from $57.38 per barrel on Wednesday to $55.52 per barrel on Friday in spite of the huge stimulus package announced on Thursday.
On Thursday, OPEC, in its latest outlook for the year, said uncertainties remain high in 2021 with the number of COVID-19 new cases on the rise.
OPEC said, “Uncertainties remain high going forward with the main downside risks being issues related to COVID-19 containment measures and the impact of the pandemic on consumer behavior.”
“These will also include how many countries are adapting lockdown measures, and for how long. At the same time, quicker vaccination plans and a recovery in consumer confidence provide some upside optimism.”
Governments across Europe have announced tighter and longer coronavirus lockdowns, with vaccinations not expected to have a significant impact for the next few months.
“The complex remains in pause mode, a development that should not be surprising given the magnitude of the oil price gains that have been developing for some 2-1/2 months,” Jim Ritterbusch, president of Ritterbusch and Associates, said.
Still, OPEC left its crude oil projections unchanged for the year. The oil cartel expected global oil demand to increase by 5.9 million barrels per day year on year to an average of 95.9 million per day in 2020.
But also OPEC expects a recent rally and stimulus to boost U.S. Shale crude oil production in the year, a projection Investors King experts expect to hurt OPEC strategy in 2021.
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