Nigeria caps jet fuel prices to avert airline disruptions

Nigeria's government is capping jet fuel prices and allowing airlines to buy supplies on credit, according to a government document seen by Reuters, as it tries to avert flight disruptions caused by soaring fuel costs.

The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) said in the document that aviation fuel should sell for 1,760 naira to 1,988 naira ($1.29 to $1.46) per litre in Lagos and 1,809 naira to 2,037 naira in Abuja, based on benchmarks from April 17 to April 23.

It warned that prices could still rise due to market volatility linked to the U.S.–Iran conflict and higher supplier costs.

The NMDPRA and aviation ministry did not immediately respond to a request for comment.

The decision follows emergency talks after airlines warned that jet fuel prices had jumped by more than 270%, forcing fare increases and raising the risk of capacity cuts.

President Bola Tinubu last week approved 30% relief on airlines' debts to aviation agencies and ordered fuel marketers, airlines and regulators to agree on a "fair" fuel price within 72 hours to prevent a sector-wide shutdown.

The talks also agreed to grant airlines a 30-day credit window to pay for fuel and tasked the aviation ministry with mediating debt disputes between operators and oil marketers, according to the document.

A technical committee convened by the NMDPRA recommended that fuel marketers sell directly to airlines within the indicated price range to cut costs and improve supply-chain transparency, the document said.

The committee also urged regulators to engage Dangote Petroleum Refinery and Petrochemicals over recently increased premiums applied to international benchmarks used to price jet fuel.

Other recommendations include validating airside fuel distributors with adequate infrastructure - potentially reducing the number of authorised suppliers at airports - and considering jet fuel for Nigeria's naira-for-crude initiative to limit airlines' foreign exchange exposure.

($1 = 1,360.5000 naira)

-Isaac Anyaogu/Reuters