Home » Subsidy removal:  Cooking gas, Jet A1 fuel prices decline, experts react

Subsidy removal:  Cooking gas, Jet A1 fuel prices decline, experts react

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In a surprising turn of events, the price of aviation fuel, commonly known as Jet A1, has taken a downward slide immediately after the removal of fuel subsidies.

This sudden drop has been observed in the price of premium motor spirit (PMS), also known as Petroleum, as reported by Daily Trust.

Telescope.ng has gathered that in Lagos, the cost of aviation fuel has plummeted from over N800 to N650, while in Abuja, it has fallen to N680 since June 1st.

Similarly, in Kano, Maiduguri, and Port Harcourt, the prices remain slightly higher. However, recent checks conducted by Daily Trust revealed even lower prices, with Jet A1 being sold at N620 in Lagos, N660 in Abuja, and N680 in Kano.

An operator expressed his views, stating, “The price is crashing, and I believe it is due to the forces of demand and supply at play. Since the removal of fuel subsidies from Jet A1 last week, this trend has been observed. It appears to be a spontaneous reaction to the developments in the oil and gas market.”

Jet A1 prices had surged beyond expectations, reaching nearly N1,000 per liter last year, causing considerable concern for operators. However, the recent reduction in the price of Jet A1 brings a welcome respite to airlines.

Notably, a similar situation is unfolding with cooking gas, as the price of a 12.5 kg cylinder has experienced a significant drop from approximately N14,000 to N6,950 in Lagos and around N8,000 in other states.

Contrary to assumptions, energy expert Olusesan Okunade clarified that the crash in cooking gas prices does not correlate with the reduction in Jet A1 prices.

He attributed the decrease to the forces of demand and supply, stating, “I believe it is due to the liberalization of the gas market and the reduced circulation of funds, leading to decreased purchasing. Consequently, suppliers choose to dispose of their stock at minimal margins. There is no gimmick involved in this scenario.”

Babatunde Adeniji, an economic analyst, suggested that the supply of Jet A1 may exceed the demand, explaining that delays in product deliveries could contribute to simultaneous stock arrivals.

As aviation fuel prices continue their decline and cooking gas costs also experience a significant drop, market experts emphasize that these developments are driven by market dynamics rather than the removal of fuel subsidies.

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