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 96.

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

  • 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 94.

    The problem with Nigerian leaders is that they have long lost the trust of the people. For too long they have made too many unfulfilled promises, that nobody believes them. The only thing Jonathan Goodluck can now do to redeem himself is to practice what he is preaching. Sell all 4 presidential jets and reduce the bloated cost of running the government. He should lead by example, not words.

  • rate this
    0

    Comment number 93.

    This govt that was meant to be a democratic govt has suddenly become insensitive & now exhibits undemocratic xteristics to her citizens.
    Subsidy will be ok if the basic ammenities/facilities are in place; security, good roads, pipebornewater & perhaps a realiable power supply but nay...
    We'll need a quarterly report of what the removed subsidy will be used for or else reverse it.
    God help Naija

  • rate this
    0

    Comment number 92.

    Ordinary Nigerians must resist this latest onslaught by the Western Imperialists move under the auspices of IMF boss Christine Largade to remove subsidies on fuel. Before the IMF boss could preach removal on subsides to Africans they must begin the process in their own countries where farmers are heavily subsidised. Why does African leaders take command from Europeans. Shame.

  • rate this
    +1

    Comment number 91.

    I believe a lot of Nigerians will gladly pay £2 per litre if they can travel pothole-free motorways, publicly lit highways, Fire and Ambulance Services when they crash, bribe-free(police) travel on their highways & Free Hospital Care when they need it.

    Its a bit rich of anyone in the West to promote the removal of a generally accessible benefit for the people. Fight the cabal not your people.

  • rate this
    0

    Comment number 90.

    N203m for Provision of Electricity At Villa, N85m for Electricity Charges, N168m for Generator Fuel, N127m for Overhauling 2 Generator Sets, N101m Rehabilitation of Villa Transformer, N293m Honourarium & Sitting Allowance, N77m for Medical Expenses. These are just a few of the ridiculous items in the budget

  • rate this
    +1

    Comment number 89.

    During the Military era, they were taking one naira tax of fuel prices only and they successfully ran the Petroleum Trust Fund (PTF), which is credited with building a lot of infrastructure in the country such as roads, hospitals, school, and manufacturing. This time, the Government has taken away the subsidy without showing what they intend to do. SMELLS LIKE A SCHEME FOR ALL OUT CORRUPTION!!

  • rate this
    0

    Comment number 88.

    N993m for Food & General Catering Services, N45.5m Kitchen Equipment, N104m for Cooking Gas, N16.4m for Rent for VP's Residence, N230m Furniture for VP's Guest House, N116m Provision of UPS (inverter) for VP's Residence, N108m Provision of Communication Equipment at VP's Guest House & Presidential Villa,

  • rate this
    +1

    Comment number 87.

  • rate this
    0

    Comment number 86.

    Taking an action like this one that 'frog leaps' fuel prizes more than 100% seems to me quite insensitive of the government. They could have approached the withdrawal of subsidy in a graduated manner. Now I wonder if they will be able to contain the fury.

  • rate this
    +1

    Comment number 85.

    Comments such as Richard Gledhill's are quite simplistic in their understanding of the issues in here.

    The Government of Nigeria is unwilling or unable to tackle a few smugglers and highly placed people who apparently benefit from the subsidy, but it is not scared of its masses. How absurd? Is this democracy the way we in the West sold and still promote it ?

  • rate this
    +2

    Comment number 84.

    It is so sad that Nigeria Government remove fuel subsidy. I pay almost 25% of my salary as TAX, nothing to show for it. I buy average of #500 fuel per day(b4 subsidy removal) to power my Gen, repair my car every month due to bad roads. etc. Everything in Nigeria is fuel dependent!!

  • rate this
    +1

    Comment number 83.

    The question remains on why this present regime has done nothing in fighting corrupted former leaders in that country.This president seems to be chasing shadows and look very much confused.Until the likes of Olusegun Obasanjo and his team are brought to justice, Nigeria will continue to suffer.They are like cancer on that nation.

  • rate this
    0

    Comment number 82.

    This government does nothing for its people. I personally cannot see the link between the decisions made in Abuja and how it protects my interest as a citizen of this country.Subsidy removal is just another of many.Well, yes! it should be removed. I agree with theory of it all but what assurances do we have that the money will be used to develop the rapidly degrading infrastructure in the country?

  • rate this
    0

    Comment number 81.

    Now I know there is nothing like democracy in Nigeria but Democrazy,a leader which can't listen to his people cry.

  • rate this
    +1

    Comment number 80.

    Can't OPEC come to the rescue? Since the 1970s, every global recession has been affected by a sharp rise in oil prices. What is needed at this juncture is a spectacular fall in the price of oil to revive American consumption and to transform Greek, Spanish, Italian and Portuguese trade deficits. A 50 dollar fall in the oil price especially around the New Year could be the optimal solution!

  • rate this
    0

    Comment number 79.

    Transport fares have been hiked. Cost of services and food will follow. Every1 is going to want to make the extra money to make ends meet one way or the other. It is said the current local refineries functioning at 30% capacity can supply all the fuel needed at about N40 a litre (tax included). No govt spokesman has been able to justify the incredulous figures they are touting. Accountability is 0

  • rate this
    0

    Comment number 78.

    @Bafana- you said it well. It's time to move on from the imaginary country called Nigeria and form countries around united peoples who can passionately develop themselves and their future generations. The Czechs and Slovaks are a great example. Look at the map of the results of last year's elections, I suggest that be a starting point. Discussions of subsidies are not needed for prosperous people.

  • rate this
    0

    Comment number 77.

    this year. My support for the fuel subsidy removal would only come if Sanusi Lamido and Okonjo-Iweala can refute Prof. Tam David West assertion of NGN40.50/litre for cost of refined petrol (if done in Nigeria) and also that the F.O.S's (Federal Agency) statistics used by the prof was false. Infact, I DO NOT TRUST MY OWN GOVERNMENT

 

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