Nigeria fury as fuel prices double after subsidy ends

 

Protesters took the streets in Abuja to vent their anger over the removal of the fuel price subsidy

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Ordinary Nigerians and trade unionists have condemned the government for withdrawing a fuel price subsidy which has led petrol prices to more than double in many areas.

The BBC's Chris Ewokor in the capital, Abuja, says many Nigerians are angry at the announcement, fearing the price of many other goods will also rise.

There have been small protests and the trade unions have called for a strike.

Nigeria is Africa's biggest oil producer, but imports refined petrol.

Years of mismanagement and corruption mean it does not have the capacity to refine oil, turning it into petrol and other fuels.

Analysts say many Nigerians regard cheap fuel as the only benefit they get from the nation's oil wealth.

Nigerian petrol station (02/01/12) Many petrol stations were closed early in the morning, while awaiting the new prices

Several previous governments have tried to remove the subsidy but have backed down in the face of widespread public protests and reduced it instead.

The IMF has long urged Nigeria's government to remove the subsidy, which costs a reported $8bn (£5.2bn) a year.

'Remove corruption, not subsidy'

Our correspondent says that early in the morning, many petrol stations in Abuja were closed as the owners were not sure what price they should charge, but they have since opened.

Nigeria's fuel prices

  • Previous price in petrol stations: $0.40/ litre
  • New price in petrol stations: $0.86
  • Previous black market price: $0.62
  • New black market price: $1.23
  • Annual cost to government of subsidy: $8bn

Prices have increased from 65 naira ($0.40; £0.26) per litre to at least 140 naira in filling stations and from 100 naira to at least 200 on the black market, where many Nigerians buy their fuel.

There are reports that petrol prices have tripled in some remote areas, while commuters have complained that motorcycle and minibus taxi fares have already doubled or tripled.

Some 200 people have gathered in central Abuja, chanting "Remove corruption, not subsidy."

They are being watched by a large contingent of soldiers and armed police.

There are also reports of protests in the main northern city, Kano.

Announcing the end of the subsidy on Sunday, the government urged people not to panic-buy or hoard fuel.

"Consumers are assured of adequate supply of quality products at prices that are competitive and non-exploitative," it said in a statement.

The government recently released a list of the biggest beneficiaries of the subsidy, who include some of Nigeria's richest people - the owners of fuel-importing firms.

Nigeria's two main labour organisations, the Trades Union Congress and the Nigerian Labour Congress, issued a joint statement condemning the move.

"We alert the populace to begin immediate mobilisation towards the D-Day for the commencement of strikes, street demonstrations and mass protests across the country," the statement said.

Nigerians try to sell fuel on the black market during a strike in 2004 Many Nigerians buy their fuel on the black market

"This promises to be a long-drawn battle; we know it is beginning, but we do not know its end or when it will end."

"We are confident the Nigerian people will triumph," it said.

Labour activist John Odah told the BBC's Network Africa programme that, judging from past experience, he doubted that the government would use the money saved by removing the subsidy to help ordinary people.

He said that the subsidy should have been retained until Nigeria's refineries had been brought up to scratch.

"As an oil-producing country, we ought not to be importing fuel in the first place," he said.

He also pointed out that Nigeria does not have many commuter railways, so people have little choice but to use motorcycle and minibus taxis, whose prices are closely linked to the price of petrol.

Fuel smuggling

Nigeria is Africa's biggest oil producer but most of the available 2 million barrels per day are exported in an unrefined state.

The country lacks refineries and infrastructure so has to import refined products such as petrol, which is expensive.

However, with the price of fuel much cheaper in Nigeria than in neighbouring countries, the subsidy led to widespread smuggling.

Nigerians are heavy users of fuel, not just for cars but to power generators that many households and businesses use to cope with the country's erratic electricity supply.

The government finance team led by respected pair central bank governor Lamido Sanusi and Finance Minister Ngozi Okonjo-Iweala have long argued that removing the subsidy would free up money to invest in other sectors and relieve poverty.

IMF head Christine Lagarde recently praised Nigeria's attempts to "transform the economy".

However, correspondents say the measures just announced could add to the difficulties faced by Nigerian President Goodluck Jonathan, who declared a state of emergency on Saturday in areas hit by Islamist violence.

 

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  • rate this
    -1

    Comment number 95.

    As a Nigerian, though theoretically supporting removal and the free market,we need to understand that in an economy running on petrol for transport and especially for power the impact is that small scale business costs will increase, and disposable income reducing further, taxes are paid by most , but theres no impact on the lives of those who pay them, with Govt still increasing personal expenses

  • rate this
    +1

    Comment number 51.

    We are talking about a government that does absolutely NOTHING for its people. Due to the poor power and transport infrastructure petrol has become the country's main energy source (we are not talking about a few private cars here). Due to poor power supply residents and businesses have to resort to petrol fired generators for electricity. That is reality in Nigeria.

  • rate this
    -1

    Comment number 39.

    I agreee the subsidies need to be removed at some point but this is the worst possible time. With all the instability in the north and still no solution to the energy problems! Nigerians and their policitians need to learn how to plan things. You don't just remove subsities like this.

  • rate this
    +1

    Comment number 28.

    It is interesting to see that several Nigerian respondees consider they have a right to never-ending fuel subsidies. Surely, in any country, whether wealthy or poor, it is most important that taxes are spent first on providing basic services, such as education and health?

    An expectation that taxes are for subsidising people's current consumption bodes badly for any country.

  • rate this
    +6

    Comment number 26.

    I don't think it is a good idea to demand reversal of the policy on fuel subsidy removal, rather we should demonstrate for a corrupt-free Nigeria. Let all those we suspect to be corrupt be brought to justice immediately, that should be our single demand. Considering the multi-ethnic make up of Nigeria, it will be difficult for the government refineries to work efficiently because of nepotism.

 

Comments 5 of 10

 

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