CITA Energies has called on the Dangote Petroleum Refinery to review its aviation fuel pricing structure and remove additional charges that it says are increasing airlines’ operating costs despite improved local supply.
The Chairman of CITA Energies, Dr Thomas Ogungbangbe, made the appeal on Friday night in Lagos at a ceremony marking the company’s 20 years of operation.
Ogungbangbe said that although the refinery’s entry into aviation fuel production had addressed previous scarcity concerns, pricing disparities and additional financial requirements were undermining the benefits of domestic refining.
He explained that aviation fuel marketers operated under a global pricing formula, with contracts based on the average of prices published daily during the preceding month, while the refinery adopted a different pricing structure.
According to him, the disparity creates uncertainty for marketers, who may sell aviation fuel without knowing the final cost of the product they purchased.
He identified an additional premium introduced by the refinery in March amid unrest in parts of the Middle East as one of the factors contributing to the pricing challenge.
The CITA chairman urged the refinery to reconsider the premium, arguing that its removal would help align local pricing with market expectations and ease the financial burden on airlines.
He said marketers were often compelled to transfer additional costs to customers to remain in business, thereby increasing expenses across the aviation sector.
Ogungbangbe also faulted the refinery’s requirement that buyers place 25 per cent of a financial instrument under lien, saying the arrangement increased financing costs and ultimately affected the price of aviation fuel.
He stressed that the government and industry stakeholders needed to ensure that the benefits of local refining translated into competitive prices for marketers and airlines.
The chairman, however, acknowledged the refinery’s contribution to improving aviation fuel availability, noting that Nigeria had previously depended on imported Jet A1 because its former refineries did not produce the commodity.
“With Dangote, the issue of scarcity is already eradicated; availability is assured but the challenge is in the pricing,” he said.
He warned that some marketers might consider importing aviation fuel if international suppliers offered more favourable prices than locally refined products.
Ogungbangbe also expressed concern over the declining profitability of businesses in the aviation fuel market, describing the company’s financial experience over the past two years as difficult.
“Before now, I could say it was profitable, but I cannot say for sure about profitability now,” he said.
He disclosed that some operators had been forced to turn down business opportunities when the cost of supplying aviation fuel threatened to result in losses.
According to him, marketers must balance their commitments to customers with the need to protect their businesses from unsustainable operating costs.
The CITA chairman called for a predictable policy environment that would enable businesses to plan investments, manage costs and remain competitive.
He noted that aviation fuel handling and into-plane fuelling were largely dominated by international oil companies three decades ago, adding that CITA Energies had demonstrated that indigenous firms could successfully operate in the technically demanding segment of the aviation industry.
He said the company had expanded its operations and trained thousands of people over the years, attributing its growth to perseverance, continuous adaptation and the commitment of its workforce.
Ogungbangbe urged policymakers and industry stakeholders to address the structural challenges affecting aviation fuel pricing to ensure that domestic refining supports a more sustainable aviation industry.
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He commended President Bola Tinubu, the Minister of Aviation and Aerospace Development, Festus Keyamo (SAN), and the Nigeria Civil Aviation Authority for their contributions to creating an environment in which indigenous aviation businesses could thrive.
The News Agency of Nigeria reports that CITA Energies recognised outstanding staff members with awards and cash gifts at the event marking its 20th anniversary.
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