After weeks of battling, domestic airlines in Nigeria have convinced the government to subsidise jet fuel. However, not everyone is as pleased with the outcome as the airlines are.
The Story So Far
The rising cost of aviation fuel has been an issue for airlines worldwide, but nowhere more so than in Nigeria. This year, fuel prices in Nigeria hit highs of N700 a litre, a 380% increase from last year’s price of N180 a litre. The situation got so bad that in March, the Airline Operators of Nigeria (AON) announced they had only “three days of fuel left.”
Since then, the AON has been in discussions with the government about capping the price of jet fuel at an affordable level. Negotiations reached boiling point this month, when airlines declared a nationwide strike, grounding all aircraft until an outcome was reached. The AON then called off the action before it came into effect, in order to “allow for a fresh round of dialogue with the government in the hope of reaching an amicable solution.”
The threat of an industry-wide strike clearly had the right effect. This week, the Nigerian government has agreed to subsidise six million litres of aviation fuel for the next three months, capping the price at N480 a litre. Meanwhile, airline operators will be able to apply for a licence to import aviation fuel from abroad, potentially offering them a better price in the long term. Airlines may have achieved the outcome they were after, but the Nigerian people are not so impressed.
On social media, Nigerians have aired their frustration over the government’s decision. Their main criticism is that only the wealthy in Nigeria can afford to fly, with most travelling by road or train instead – modes of transport that could benefit from similar government investment. An airline ticket from Lagos to Abuja costs $227, almost twice what the average Nigerian earns in a month. The subsidies will cost the taxpayer between one and three million dollars, but will only advantage the few who can afford to fly.
The subsidies could be bad news for the government as well. Nigeria already spends a quarter of its budget subsidising petrol, against the advice of the World Bank. This has meant that even though Nigeria is Africa’s largest oil producer, the rise in global oil prices has actually cost the government money.
What are your thoughts on Nigeria’s jet fuel subsidies? Let us know in the comments below!