Nigeria partially reinstates fuel subsidy

Monday, 16 January 2012 13:52

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Nigerian unions have suspended their crippling week-long strike, news agencies report, after Goodluck Jonathan, Nigeria’s president, cut petrol prices by 31 per cent on Monday and promised to investigate oil sector corruption.

Unions called the strike after the removal of fuel subsidies. It remains unclear whether the suspension of the strike is conditional.

The country’s two main unions, which called the mass action, earlier announced the end of street protests but said workers should stay at home until labour leaders had reviewed the president’s announcement. The removal of the fuel subsidy on January 1 sent the petrol price soaring from 65 naira a litre, or $0.40, to 141 naira.

The new price is 97 naira. Mr Jonathan met the labour officials on Sunday evening for a third round of talks but said they had reached “no tangible result”. He added the government remained committed to deregulating the downstream oil sector – a policy that requires the removal of subsidies.

“However, given the hardships being suffered by Nigerians, and after due consideration and consultations with state governors and the leadership of the National Assembly, government has approved the reduction of the pump price of petrol to N97 per litre,” he said in a pre-recorded speech on television.

Labour’s position was considerably strengthened by a threat from the main oil union Pengassan to start shutting crude production from Sunday if the government did not give ground. Nigeria is Africa’s largest oil producer and crude sales provide more than 80 per cent of government revenues.

While urging people to return to work, Mr Jonathan said legitimate protests had been hijacked by people “seeking to promote discord, anarchy and insecurity”. There was heightened security in the main city of Lagos on Monday, with police and some military personnel on the streets.

Though Nigeria produces more than 2m barrels of oil daily, it imports most of its fuel due to the poor state of its refineries. Subsidising petrol cost it more than $8bn last year, a figure swelled by corruption and inefficiency.

In a statement on Sunday night, petroleum minister Diezani Alison-Madueke said that the Economic and Financial Crimes Commission had been invited to review all subsidy payments. She also promised a comprehensive review and audit of the oil sector parastatals, and said she would seek quick passage of the Petroleum Industry Bill, which is key to reform.

The subsidy withdrawal caused countrywide anger because cheap petrol is one of the few benefits ordinary Nigerians see from the government.

Though the biggest gainers are the minority who own cars, the modest fuel price also keeps transport fares down and enables even low earners to run petrol generators, essential in a country with an unreliable power supply.

The mass action last week saw tens of thousands of people on the streets and forced the closure of banks, businesses, schools and shops, while road and air transport was restricted.

As well as the unions, prominent religious leaders, intellectuals and musicians have come out against the subsidy removal. Protest groups have used social media networks, text messaging and the “Occupy Nigeria” tag to co-ordinate demonstrations and spread information about wasteful government spending.

Yemi Adamolekun, executive director of Enough is Enough Nigeria, a good-governance group, said at the weekend that simply cutting the petrol price would not be enough “If the unions accept anything other than 65 naira petrol our protests will continue,” she said