One sector mostly affected by the international energy crisis is aviation. It is one sector that is yet to fully recover from the COVID-19 crisis that crippled the economies of many countries, including the developed nations. For months in 2020, the airlines were grounded as restrictions were imposed to curb the spread of the pandemic.
A new twist came with the Russian invasion of Ukraine in February, which spurred an energy crisis and food scarcity in most parts of the world. Africa is one of the hardest hit as it is dependent on other countries and regions for its supplies. In Nigeria, inflation in the energy sector has affected the Premium Motor Spirit supply chain, diesel, and Jet A1 that negatively impacts the cost of air transportation.
High cost of flying has resulted in high cost of goods and services, as airlines have served notice that the surge in price of the fuel would inevitably lead to introduction of surcharges. The airlines indicate that fuel accounts for 40 per cent of their operational cost. Already, prices have been adjusted upwards internationally by about 52 percent.
Nigeria is not being spared. Not even meetings between airline operators and federal legislators have helped. Passengers are made to pay almost 100 per cent higher in some cases. And as the economy is yet to recover from economic recession and the COVID pandemic, the volume of passengers has dropped. As a consequence, the oldest airline in the country, Aero Contractors, has suspended operations. Others have indicated that they may soon follow suit.
It is obvious that they did not manage the crisis well. Knowing that the transport sector in the country, be it air or land, remains vulnerable to the vagaries of the international crisis, operators should have worked together with other stakeholders to find immediate as well as lasting solutions. Recently, President Muhammadu Buhari said Nigerians would express gratitude to him for expertly managing the economy if they knew what was happening in other African countries. It is a shame that Nigeria is being compared to countries that are resource-strapped. Crude oil that is the main source of the various fuels is available abundantly in this country. In addition, we have four refineries that are all down owing to mismanagement by government.
The Buhari administration had blamed the comatose state of the refineries on previous governments, but what has it done in the past seven years? At first, former Petroleum Resources Minister, Dr. Ibe Kachikwu, pledged that the refineries would be sold to the private sector. That was not done. At another point, it was said a number of modular refineries would be established in many parts of the country, which again did not materialise. At this point, the Port-Harcourt refinery is being rehabilitated at the cost of a whopping $1.5 billion. The policy summersaults made the country unprepared for the current crisis.
As we have previously argued, the solution to perennial crisis in the energy sector and spill-on effects on the economy is to locally refine our crude. Otherwise, we will continue to depend on other countries and import their inflation. There can be no local solution to a global crisis when we are not in control of inputs. The challenge would weigh more on Nigerians as transport by road has become too hazardous with terrorists and kidnappers operating at will on our highways. Yet the waterways are not developed for transportation and the railway is just being revived.
The Federal Government has a duty to quickly find a solution to the problem. Excuses would not hold as government isn’t elected to pass the buck. If nothing is done urgently, the country’s airlines could all pack up.