FG intervenes in aviation crisis, mandates 30-Day credit window for jet fuel

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Key points

• Financial Relief: The Federal Government has directed fuel marketers to provide a 30-day credit facility to domestic airlines to alleviate immediate liquidity pressures.

• Price Volatility: New indicative price bands for Jet A1 have been set between N1,760 – N2,037 per litre, though external factors like the U.S.-Iran conflict threaten further hikes.

• Operational Strain: Domestic carriers report that fueling a single flight now costs upwards of N7.6m, a 350% increase since March, leading to warnings of imminent capacity cuts.

Main story

The Federal Government of Nigeria has moved to prevent a total collapse of the domestic aviation sector by brokering a strategic credit agreement between airline operators and fuel marketers.

Following high-level deliberations led by the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), the government has requested that marketers grant airlines a 30-day window to settle fuel debts and allow for direct bulk purchases.

The intervention comes as the industry reaches a breaking point. Carriers such as Ibom Air have raised the alarm, disclosing that the cost of fueling a single domestic leg has surged from N2.1m in January to over N7.6m in April 2026. Despite the proximity of the Dangote Petroleum Refinery, which produces roughly 24 million litres of jet fuel daily, domestic prices remain pegged to volatile international benchmarks, leaving local airlines struggling to absorb massive operating losses.

The issues

Pricing Disparity: While the Dangote Refinery is recording record profit margins by exporting jet fuel to Europe, domestic airlines are paying nearly N3,300 per litre once logistics and storage fees are factored in.

Infrastructure Gaps: The NMDPRA noted an oversaturation of “airside” distributors. Plans are now underway to trim these operators to only those with verifiable infrastructure to streamline the supply chain.

Geopolitical Impact: The ongoing U.S.-Iran conflict has introduced significant volatility into the “Platts” average prices, making long-term cost forecasting nearly impossible for Nigerian carriers.

Ground Handling Debt: Compounding the fuel crisis is a N9bn debt owed by airlines to ground handling companies, who have threatened to withdraw services, potentially grounding all domestic traffic.

What’s being said

“The fuel price situation is an unprecedented crisis… we have had to absorb the immense operating losses. If this persists, airlines will not be able to continue operating just to pay for fuel and nothing else.”

“European refiners are making about $15 per barrel, but Dangote is likely earning significantly higher margins—more than double—because of its configuration and access advantages.”

What’s next

The Ministry of Aviation is scheduled to facilitate a “reconciliation meeting” between oil marketers and airline operators to resolve outstanding debts. Furthermore, the committee has recommended including Aviation Turbine Kerosene (ATK) in the Federal Government’s “Naira-for-Crude” initiative. If approved, this would allow local refineries to bypass foreign exchange hurdles, potentially stabilizing the pump price for domestic carriers in the coming months.

Bottom line

The Nigerian government is attempting to bridge the gap between a high-performing domestic refining sector and a struggling aviation industry. While the 30-day credit window provides a temporary “oxygen mask” for airlines, the long-term survival of the sector depends on whether the government can successfully decouple domestic fuel prices from the volatile global market.