Dangote Refinery Sets Aviation Fuel Price at N1,820/Litre: A Deep Dive into Nigeria’s Jet Fuel Crisis and the Path to Market Stability
By Oluwatobi Odeyinka, Business Editor (Energy, Money Market, Technology & Macroeconomic Trends)
The Dangote Petroleum Refinery has officially set the gantry price of aviation fuel (Jet A1) at N1,820 per litre, a strategic move aimed at injecting much-needed transparency into Nigeria’s notoriously opaque aviation fuel market. This development, first reported by Vanguard, comes at a critical time when airline operators are grappling with soaring operational costs that threaten the viability of domestic air travel.
Source: UGC
Airlines still pay above benchmark
The Reality Gap: Why Airlines Are Still Paying More
Despite the Dangote Refinery’s benchmark price, market checks reveal a stark disconnect. The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) had earlier advised that aviation fuel should sell within a range of N1,760 to N1,988 per litre in Lagos and approximately N2,037 per litre in Abuja, based on prevailing market conditions. However, many marketers are reportedly selling Jet A1 at N2,230 per litre or higher—a premium of over 22% above the refinery’s gantry price.
This discrepancy highlights a fundamental challenge in Nigeria’s fuel supply chain: the gap between ex-refinery prices and end-user costs is often inflated by intermediaries, logistics inefficiencies, and a lack of enforceable pricing mechanisms. The NMDPRA’s guidance, while well-intentioned, remains largely advisory, leaving airlines vulnerable to price gouging.
Why the NMDPRA’s Pricing Guidance Falls Short
The NMDPRA’s recommended price band was developed through stakeholder engagements involving airline operators, oil marketers, depot owners, and other industry players. Yet, without a robust enforcement framework, these recommendations are often ignored. As Chibuike Uloka, spokesperson for United Nigeria Airlines, explained, the aviation fuel market operates under a free-market system, which limits the regulator’s ability to impose fixed prices. The NMDPRA’s guidance is based on factors such as landing costs, but marketers ultimately determine the final selling price—often adding margins that far exceed reasonable operational costs.
This lack of enforcement creates a vicious cycle: airlines, already burdened by high fuel costs, pass these expenses onto passengers through higher ticket prices, reducing demand and further straining the sector.
Calls for transparency in jet fuel pricing
Call for Transparency: A Solution to Price Volatility
Olatide Jeremiah, CEO of Petroleumprice.ng, has called for greater transparency in the pricing structure. He urged the Dangote Refinery to publish its daily gantry prices, arguing that such a move would help reduce excessive margins by intermediaries and curb artificial price increases. “Improved transparency could ease pressure on airlines and stabilise the market,” Jeremiah noted.
This is not just a theoretical solution. In markets where refineries publish daily ex-refinery prices—such as in the United States or parts of Europe—buyers can benchmark their costs, negotiate better deals, and hold intermediaries accountable. For Nigeria, adopting a similar practice could be a game-changer, especially given the Dangote Refinery’s dominant position as the country’s largest domestic producer of Jet A1.
Practical Example: How Transparency Could Work
Imagine a scenario where the Dangote Refinery publishes its daily gantry price at 8:00 AM each day. An airline in Lagos could then compare this price with what marketers are offering. If a marketer is charging N2,230 per litre while the refinery’s price is N1,820, the airline can negotiate or seek alternative suppliers. Over time, this transparency would force marketers to justify their margins, reducing the spread between ex-refinery and retail prices.
Airlines highlight operational impact
The Human Cost: How Fuel Prices Are Crippling Airlines
The impact of high jet fuel prices on airline operations is staggering. According to Chibuike Uloka, fuel expenses per operation have skyrocketed from approximately N2.9 million in January to N7.6 million—a 162% increase in just a few months. For operators using larger aircraft, such as Boeing 737s or Airbus A320s, the costs are even higher.
This surge has forced airlines to make difficult decisions: reduce flight frequencies, cancel unprofitable routes, or increase ticket prices. The result is a less accessible air travel market, with many Nigerians priced out of flying. The situation is particularly dire for regional routes, where thin margins make it nearly impossible to absorb such cost increases.
Broader Context: The Global Jet Fuel Market
Nigeria is not alone in facing high jet fuel costs. Globally, Jet A1 prices have been volatile due to geopolitical tensions, OPEC+ production cuts, and post-pandemic demand surges. However, Nigeria’s challenges are compounded by domestic inefficiencies: a weak naira, high logistics costs, and a fragmented supply chain. While the Dangote Refinery’s entry into the market was expected to reduce prices, the reality is that structural issues remain.
Source: Getty Images
Nigerian airlines face delays over aviation fuel crisis
What This Means for Passengers
Legit.ng earlier reported that air travellers in Nigeria are experiencing delays and uncertainty as a prolonged shortage of aviation fuel continues to disrupt flight operations across major airports. Airlines say the scarcity is affecting their ability to maintain schedules, leading to delayed, rescheduled, and in some cases, cancelled flights. According to operators, the situation has worsened in recent days, leaving many passengers stranded and forcing others to reconsider their travel plans.
For the average traveller, this means higher ticket prices, fewer flight options, and increased uncertainty. The ripple effects extend beyond airlines: tourism, business travel, and even cargo operations are all impacted, with potential consequences for Nigeria’s broader economy.
Looking Ahead: What Needs to Change
To address the aviation fuel crisis, stakeholders must move beyond advisory pricing and embrace structural reforms. Key recommendations include:
- Mandatory Daily Price Publication: The Dangote Refinery and other major suppliers should be required to publish their daily gantry prices, enabling airlines to benchmark costs.
- Strengthened Regulatory Enforcement: The NMDPRA should be empowered to enforce pricing guidelines, with penalties for marketers who exceed reasonable margins.
- Investment in Logistics: Improving the efficiency of fuel transportation and storage could reduce costs and stabilise supply.
- Diversification of Supply: Encouraging competition among refineries and importers could help reduce dependence on a single source.
Until these changes are implemented, airlines and passengers will continue to bear the brunt of a market that lacks transparency and accountability. The Dangote Refinery’s price announcement is a step in the right direction, but it is only the beginning of a long journey toward a stable and fair aviation fuel market in Nigeria.
Source: Legit.ng
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