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Marketers Accuse CBN of Frustrating Aviation Fuel Imports

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Arik Airplane
  • Marketers Accuse CBN of Frustrating Aviation Fuel Imports

The chronic scarcity of aviation fuel, popularly known as Jet A1, which has dragged on for several months, has grown worse in the past three weeks mainly as a result of the inability of the Central Bank of Nigeria to provide foreign exchange to importers despite many promises to do so.

According to oil traders and operators in the airline business, the CBN, in its bid to avert the scarcity of petroleum products during the Yuletide, asked banks to submit bids for a “special currency auction” on December 5, 2016, which targeted fuel importers in order to meet the demand for imports.

They noted that prior to the request, the apex bank had suspended the provision of the United States dollars needed by the oil dealers for the importation of refined products.

Traders had explained that the CBN sent a message to the banks to submit backlog of dollar demands from fuel importers around 3pm on December 5 for the special intervention.

Fuel shortages often occur across the country during festive periods such as Christmas, New Year and Muslim holidays.

Traders said the government wanted to ensure that fuel retailers had enough products, so it decided through the CBN to channel dollars to the importers and also to avoid shortages, which in May crippled banking, airline and telecom services.

They, however, could not tell at what rate the central bank was to sell the dollars.

But three weeks after the supposed intervention by the CBN and compliance by some banks, it was gathered that no oil marketer had received any forex.

This, according to operators in both the aviation and oil sectors, has further worsened the chronic scarcity of Jet A1 in the past two to three weeks.

It was, however, learnt that the Federal Ministry of Petroleum Resources and the Nigerian National Petroleum Corporation had to swiftly intervene in order to avert the cancellation of flights on a larger scale by domestic airlines as a result of the scarcity of aviation fuel.

The Executive Secretary, Major Oil Marketers Association of Nigeria, an umbrella body of some petroleum products’ importers, Mr. Obafemi Olawore, told our correspondent that forex accessibility was still an issue affecting the importation of products.

When reminded of the special intervention by the CBN and asked if the marketers had started accessing forex based on the apex bank’s promise, he replied, “We don’t have it.”

“Let the CBN know that we don’t have it. What we are using to carry out importation of products is the intervention put in place by the Petroleum ministry and, of course, the NNPC,” Olawore added.

Domestic airlines had revealed last week that the oil marketers were not importing Jet A1 due to the lack of forex and that this had prompted the cancellation of many flights.

Nigeria’s biggest commercial airline, Arik Air, had alerted passengers to the worsening aviation fuel supply situation, leading to flights delays and cancellations at airports across the country.

“Arik Air has been operating over 100 daily flights and, therefore, experiences a larger impact of this scarcity compared to other airlines. The airline requires a daily supply of approximately 500,000 litres for its operations, but it has been getting between 180,000 and 200,000 over the past 10 days, which has severely impacted the scheduled flight operations,” the airline’s spokesman, Adebanji Ola, said in a statement.

But the MOMAN executive secretary assured the flying public that the scarcity of aviation fuel was being addressed as a shipload of Jet A1 had arrived Nigeria, adding that another was being expected.

Olawore said, “As of Saturday, there’s aviation fuel. We had tightness some two, three weeks back; but as we speak, a ship has just discharged the product for us. It discharged about 10 million litres and has actually left the jetty. This week, another ship is coming in for Christmas.

“The problem of scarcity was primarily because of the inability to source foreign exchange for the importation of aviation fuel as of two to three weeks ago. But as of today, we have the product and more is coming, thanks to the managing director and group executive director, downstream, of the NNPC, as well as the managing director of the PPMC.”

Another major marketer told our correspondent that some of the banks had complied with the CBN directive by submitting bids for the special currency intervention.

The marketer, who spoke to our correspondent in confidence, said, “But it may interest you to know that despite the fact that it is now about three weeks after this was done, we have not received any forex in that respect from the CBN through these banks.

“The CBN is frustrating us when it comes to accessing forex, and that is one major reason for the scarcity of aviation fuel. This would have spread further if not for the intervention of the Petroleum ministry and its agencies operating in the upstream and downstream sectors.

“The truth is that there has been no access to forex yet. Aside aviation fuel, I will also want you to know that no marketer is importing Premium Motor Spirit for now. Over 90 per cent of products are through the PPMC, and there are some extraneous issues plaguing the industry right now.”

When contacted, the spokesperson for the CBN, Mr. Isaac Okorafor, did not pick several calls made to his mobile phone.

He also did not respond to a text message sent to him by our correspondent on whether the bank had started making forex available to oil marketers with respect to the request it made on December 5.

However, the Group General Manager, Group Public Affairs Division, NNPC, Mr. Ndu Ughamadu, explained that the national oil firm had to intervene in order to address the issue of Jet A1 scarcity in the aviation sector.

He also noted that the window by which the NNPC supports petroleum importers with forex by pairing them with international oil companies was still open.

In May, the government agreed a deal with the IOCs in the country to sell their dollars directly to fuel importers to end months of scarcity partly caused by a currency shortage after it hiked fuel prices by 67 per cent.

On the scarcity of Jet A1 and what the corporation was doing, Ughamadu said, “The NNPC is also participating in the provision of aviation fuel. Last week, a shipload of ATK by the NNPC arrived and it is going to be a continuous exercise. As you know, the Jet A1 market, like diesel, is deregulated.

“But the emphasis now is on PMS for it is what most of the generality of the populace use. As for aviation fuel, it is deregulated. So, if you have the forex, you can import; and the government has also through the NNPC opened the window where marketers can source for forex by working with big upstream companies.”

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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Crude Oil

Crude Oil Rises to $72 a Barrel on Strong Demand Recovery

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Brent crude oil - Investors King

Oil prices rose on Friday to fresh multi-year highs and were set for their third weekly jump on expectations of a recovery in fuel demand in the United States, Europe and China as rising vaccination rates lead to an easing of pandemic curbs.

Brent crude futures edged up 13 cents to $72.65 a barrel to 1145 GMT, a day after closing at their highest since May 2019.

U.S. West Texas Intermediate (WTI) crude futures were up 14 cents to $70.43 a barrel, a day after their highest close since October 2018.

U.S. investment bank Goldman Sachs expects Brent crude prices to reach $80 per barrel this summer as vaccination rollouts boost global economic activity.

The International Energy Agency said in its monthly report that OPEC+ oil producers would need to boost output to meet demand set to recover to pre-pandemic levels by the end of 2022.

“OPEC+ needs to open the taps to keep the world oil markets adequately supplied,” the Paris-based energy watchdog said.

It said that rising demand and countries’ short-term policies were at odds with the IEA’s call to end new oil, gas and coal funding.

“In 2022 there is scope for the 24-member OPEC+ group, led by Saudi Arabia and Russia, to ramp up crude supply by 1.4 million barrels per day (bpd) above its July 2021-March 2022 target,” the IEA said.

Data showing road traffic returning to pre-COVID-19 levels in North America and most of Europe was encouraging, ANZ Research analysts said in a note.

“Even the jet fuel market is showing signs of improvement, with flights in Europe rising 17% over the past two weeks, according to Eurocontrol,” ANZ analysts said.

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Energy

Africa Oil Week Remains Force of Good for Africa

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Crude oil - Investors King

Hyve Group Plc, organisers of Africa Oil Week have confirmed that business opportunities and discussions at the 2021 edition will remain focused on driving investment into Africa for its sustainable socio-economic development, as it has done for the past 27 years.

The event which will temporarily move to Dubai for 2021 due to COVID-19 restrictions in South Africa will take place on 8-11 November 2021 and has support from key African stakeholders.

Atty. Saifuah-Mai Gray, CEO of National Oil Company of Liberia said “As an oil and gas hub, Dubai represents a huge opportunity for Governments to meet a high concentration of investors with the financial and technical capability to partner in our national upstream”

Africa Oil Week is known for driving deals and transaction across the African oil and gas sector, and after being forced to host the 2020 edition virtually, confirmation that a live event will take place in 2021 has delighted clients.

Miriam Seleoane, Assistant Director at the Department of Trade and Industry and Competition said

“The DTIC has supported the Africa Oil Week for many years. For 2021 we will be taking a delegation of 20+ companies to the Oil Week to advance partnership and investment dialogue between our South African businesses and international partners. Africa Oil Week remains a huge platform for the DTIC and our South African private sector”.

The event will run under the theme “succeeding in a changed market”, and it will be the only large-scale oil and gas event focused solely on Africa to run in person in 2021.

In a previous statement, the organiser cited Dubai as the “next best location” after Cape Town due to the exceptional progress made in the UAE’s vaccination programme. Dubai is also the leading financial centre in the Middle East, Africa and South Asia and presents an opportunity for attendees to meet with new capital holders, further driving investment into Africa.

The 2022 event will return to Cape Town, where organises have said it is the event’s “natural home” and to which they are strongly committed for the long-term.

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Crude Oil

Crude Oil Rebounds on Thursday After Slipping on U.S Weak Demand

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Crude Oil - Investors King

Oil prices rose on Thursday a day after slipping on data indicating weak U.S. driving season fuel demand as investors eyed upcoming U.S. economic data.

Brent crude oil futures were up 18 cents, or 0.25%, at $72.40 a barrel, holding just shy of a high not seen since May 2019.

U.S. West Texas Intermediate oil futures rose 11 cents, or 0.16%, to $70.07 a barrel, staying near its highest since Oct. 2018.

“The market is recovering impressively from yesterday’s dismal weekly EIA report, the drop in weekly gasoline demand was particularly disappointing,” said Tamas Varga, analyst at PVM Oil Associates.

“It will interesting to see whether the monthly OPEC report due out later will confirm last month’s upbeat demand assessment for the second half the year. If it does, as expected, it should support oil prices.”

Varga added that U.S. inflation data and jobless claims would provide more direction on the health of world’s biggest economy and clues as to whether the Federal Reserve might start tapering stimulus.

U.S. crude oil stockpiles that include the Strategic Petroleum Reserve (SPR) fell for the 11th straight week as refiners ramped up output, but fuel inventories grew sharply due to weak consumer demand, the Energy Information Administration (EIA) said on Wednesday.

Crude inventories that exclude the SPR fell by 5.2 million barrels in the week to June 4 to 474 million barrels, the third consecutive weekly drop. But fuel stocks were up sharply, with product supplied falling to 17.7 million barrels per day (bpd) versus 19.1 million the week before.

Implied gasoline demand fell to 8.48 million bpd in the week to June 4, down from 9.15 million bpd from the week before, but up from 7.9 million bpd a year ago, EIA data showed.

Weighing on prices, India’s fuel demand slumped in May to its lowest since August last year, with a second COVID-19 wave stalling mobility and muting economic activity in the world’s third largest oil consumer.

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