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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  • Comment number 56.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this
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    Comment number 55.

    In as much as it is not ideal to waste such huge amount of money in fuel, but its removal is not the ultimate. Why can't our refinaries be put in order to ensure that refining and conversion of petrol are done locally. Imagine in just less than 24 hours, the subsidy removal was announced, the fuel price has jumped from 65 to 140 naira. What will be our fate in next 3 days, God help us.

  • rate this
    +1

    Comment number 54.

    Am I too early in suggesting that the removal of the fuel subsidy and the proposed Labour Union action may lead to a civil war? A redistribution of wealth is sadly overdue for the poor, hardworking, ordinary Nigerian.

  • rate this
    0

    Comment number 53.

    powder keg for years any investors looking for profit 2012 you would do well to buy oil shares because with Iran about to pull the plug and Nigeria about to blow up - thats some 20% of the worlds oil supply down the swanny and prices will rocket. So together with Gold and oil shares - you cant go wrong. Good luck and dont say you didnt know!

  • rate this
    0

    Comment number 52.

    I think their is something wrong with the government in Nigeria the only think about themselves and what the are going to benefit.

  • 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 50.

    What is unsustainable is the greed, corruption, bad leadership, lies "subsidization of Government" & unfulfilled promises in Nigeria.

    There is a huge disconnect between average Nigerians and policy makers, who do not pay rents, buy fuel for their cars & generators and in some cases pay for their food. Ultimately it is the poor that will suffer this.

  • rate this
    +2

    Comment number 49.

    Nigeria, 6th largest producer in OPEC IMPORTS most of its petroleum. Yet refining capacity of 4 refineries = @ 445,000 Barrels per day:
    Old Port Harcourt Refinery - 60,000
    New Port Harcourt Refinery - 150,000
    Warri Refinery - 125,000 (upgraded from 100) &
    Kaduna Refinery - 110,000 barrels per day.
    BUT these operate at just 10% capacity, refining @ 45,000 barrels/day.
    Why?

  • rate this
    0

    Comment number 48.

    They need to first get the new refinaries up and running and full capacity. Get the new power plants functional to reduce the number of people living on generators (a big drain on petrol and diesel). Then they need to stop fuel imports AND exports. At this point they can safely remove the subsities with minimal damage.

  • rate this
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    Comment number 47.

    A high percentage of the population in general depends on public transportation, the price of which has now gone up due to the subsidy. And transportation is probably not the only area where prices will increase. The price of petrol really is too closely tied to many services.
    The fact that we have not been shown any "solid" plan for th redirection of the funds does not exactly help us see clear.

  • rate this
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    Comment number 46.

    It is rather absurd to always bounce back on the poor masses, while the government have obviously refuse to generate income from other sector. yes oil is only one of the numerous sector waiting to excel. This is happening because we are lazy and myopic .

  • rate this
    0

    Comment number 45.

    The removal of fuel subsidies should be done gradually over a two to three year period to allow people and businesses time to adapt to the new situation.

  • rate this
    +2

    Comment number 44.

    Geoff hughes; your country is a normal country.Nigeria is an imaginary country,where looting and scamming is a trade.If the govt can account for her income then good,but not in Nigeria.The president budgted $40 Million for his food and entertainments in 2012,70% of Nigerians live below $2/day.

  • rate this
    0

    Comment number 43.

    "Maybe" over time, the subsidy could have been removed, and the funds redirected to other areas more in need, but right at the beginning of the new year is a brutal time to more than double petrol prices. People are already tweeting about having to walk because transportation costs were too high today. Not all Nigerians drive cars n not everyone can afford to keep a full tank. Th poor will suffer.

  • rate this
    0

    Comment number 42.

    Nigeria has been producing oil for decades.You'd think for the $8B annual subsidy cost, they could build a great refinery and get all the gasoline and kerosine they need without paying to re-import it. That should lower the price and guarantee supply.
    What a pathetically corrupt country.

  • rate this
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    Comment number 41.

    Two sides: i) Reality: subsidies are not sustainable and are inappropriate; ii) Sentiment: refusal to accept government can (or is able to) impact lives with the resources if/when realised from discontinuing subsidies. Abundant historical evidence exists to support both sides. Healthy cynicism while holding public officers, especially elected ones responsible - ACCOUNTABILITY, the magic word!

  • rate this
    0

    Comment number 40.

    u gotta be kiddin

  • 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
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    Comment number 38.

    This is the time for us as a Nation to look ahead rather than condeming the action of the government. I have long waited for this day and i am happy it is here at last.
    Long live nigeria, we shall make it

  • rate this
    0

    Comment number 37.

    The following need to bec onsidered

    1) Tcost of subsidising fuel has jumped in the course of one year from N240b to over a trillion in oneyear?!

    2) Ex Ministers of Petroleum have stated categorically that there is no such thing as subsidy - that it is a farce to embezzle funds.

    3) The govt continues to funds it excessive wasteful spending e.g N1b on food only for the President and VP.

 

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