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Cablegate: Aviation Fuel Shortages Ground Many Domestic

This record is a partial extract of the original cable. The full text of the original cable is not available.

091506Z Nov 04

UNCLAS SECTION 01 OF 02 LAGOS 002264

SIPDIS

STATE PLEASE PASS FCC

E.O. 12958: N/A
TAGS: ECPS ECON EINV NI
SUBJECT: AVIATION FUEL SHORTAGES GROUND MANY DOMESTIC
FLIGHTS

REF: Lagos 2195

Summary
--------

1. (U) An end appears in sight for the Nigerian jet
fuel shortage, as a tanker is in the process of
delivering 14,800 metric tons to Lagos. Conoil
Producing Limited, the downstream firm selected to
supply aviation fuel to the country for this quarter,
failed to make its October delivery. As a result, over
the last week, domestic airlines confronted serious
shortages in aviation fuel. Numerous domestic flights
were cancelled, consolidated, and/or delayed because of
the supply problem. According to the press, over 1,000
passengers were stranded at Nnamdi Azikiwe airport in
Abuja over the weekend. Aviation fuel increased from
N45 to N62 per liter in September and now is reportedly
being sold for as high as N85. Some international air
travel has been delayed by the shortage, and flights
are landing in neighboring countries to obtain fuel.
End summary.

Conoil Defaults on Jet Fuel Delivery for Nigeria
--------------------------------------------- ----

2. (U) Press reported on November 8 that Nigerian
firm Conoil defaulted on delivery of aviation fuel for
the month of October; an emergency tender granted to
African Petroleum PLC also failed to resolve the
shortage. Due to the high cost of importing fuel, the
five downstream fuel marketers (Oando Plc, African
Petroleum Plc, Mobil Oil Nigeria, Texaco Nigeria Plc,
and Total Nigeria Plc) conduct an auction to determine
which firm will be responsible for importing jet fuel
for the quarter. Conoil had won the bid for October,
but defaulted on the actual delivery of the cargo. The
Nigerian National Petroleum Corporation (NNPC) has
placed a one-year ban on Conoil importing jet fuel, as
it failed to deliver a 30,000 metric ton consignment
into the country.

Jet Fuel Prices Climbing Since September
-----------------------------------------

3. (U) Aviation fuel prices jumped from N45 to N62 per
liter in September. Deregulation in the downstream
fuel sector caused the September price increase, but
was subsequently compounded by Conoil's October failure
to meet commitments to deliver fuel to the country.
Since then the price of the fuel, known as Jet A1, has
been steadily inching up. It is now selling for as
high as N85 per liter. Domestic airline operators have
passed on these cost increases to the customer through
an overall fare increase and hefty fuel surcharges.

Fuel Surcharges and Rising Ticket Prices
-----------------------------------------

4. (U) On November 4, Chachangi Airlines warned its
customers via radio announcements that it would have to
reduce its flights if the fuel supply remained
uncertain. Edward Boyo, Overland Airlines official,
confirmed that his company was struggling to cope with
the fuel scarcity. Boyo said the price hike in fuel
was only a secondary concern for most operators. He
said that some of Overland's flights were being
cancelled, while others were being consolidated to put
larger numbers of passengers on one flight. Press
reported that over the weekend, more than 1,000
passengers were stranded at the domestic wing of the
Abuja airport. Press quoted the managers of numerous
airlines saying that instead of several flights per
day, they had been reduced to flying only one or two.
Exxon Mobil has been able to continue to fly its
personnel around the country, but Brazilian oil major
Petrobras could not return some personnel from an
offshore rig on November 5 due to the shortage of fuel.

Oando Demanding Surcharges for Fuel
-----------------------------------

5. (U) Boyo said Oando, the only marketer currently
dispensing fuel to domestic airlines, is "exploiting"
the scarcity. He alleged that some staff members of the
company are demanding "additional payments" from the
desperate airline operators. Boyo called on the GON to
better regulate the sector.

Int'l. Flights Diverted, Delayed, Due to Shortage
--------------------------------------------- -----

6. (U) International flights have been forced to land
in neighboring countries, such as Ghana, to take on
enough fuel to fly to Europe. Energy sector contacts
have confirmed that both Friday and Saturday British
Airway flights to London were forced to land elsewhere
to re-fuel, and were delayed for as much as six hours
while the airlines attempted to locate fuel.

Fuel Delivered and Resolution in Sight
---------------------------------------

7. (U) An official from Shell Nigeria Oil Products,
Shell's downstream division, confirmed that a tanker
with 14,800 metric tons of Jet-A1 fuel is at berthed at
the Apapa Port in Lagos, and is currently discharging
fuel to marketers. The Shell official expects that the
supply of jet fuel will return to normal as of the
evening of November 9.

BROWNE

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