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Nigerians strike over fuel subsidy cut

Jan 09 2012 14:01 Reuters

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Lagos/Abuja - Thousands of Nigerians took to the streets across Africa’s top oil producing nation on Monday, launching an indefinite nationwide strike to protest against the axing of fuel subsidies.

Shops, banks and petrol stations were shut and the highways into the main commercial city of Lagos, usually clogged with rush hour traffic, were empty.

Production of Nigeria’s average 2 million barrels of crude oil a day carried on as normal despite the strike, sources at two international oil companies and the state firm told Reuters.

Thousands of people gathered outside Labour house, in Yaba, the downtown market area of Lagos, waving union flags, from where they started marching and shouting “solidarity forever”, closely watched by armed police in riot gear.

Some of them blocked the road with burning tyres and waved placards challenging the record of President Goodluck Jonathan, whose presidency is already under pressure from an increasingly violent Islamist insurgency in the north of the country.

Jonathan has said he will not back down and the strikes will test his resolve. Strikes have forced previous governments into u-turns on fuel subsidy cuts.

Nigeria’s fuel regulator announced the end of the subsidy on January 1 as part of efforts to cut government spending and encourage badly-needed investment in local refining.

Economists say the subsidy filled the fuel tanks of the rich and middle classes at the expense of a poor majority living on less than $2 per day, fed corruption and siphoned off billions of dollars of public funds to a cartel of fuel importers.

Removing it to cut costs has been a flagship policy of Jonathan and his economic management team.

“It was 25% of total expenditure in the budget, the single biggest item - more than education, health and agriculture combined,” said Bismarck Rewane, chief executive of Lagos-based consultancy Financial Derivatives. “As long as they spend the money right, removing the subsidy has to be good.”

Fuel fury

Nigerians’ anger over the subsidy cut is further straining Jonathan’s presidency, already facing criticism for failing to contain the Boko Haram Islamist movement in the north.

On Sunday he accused some within his own government of backing them, saying they had created a situation worse than the 1960s civil war that killed a million people.

Unions, workers, and middle class Nigerians with cars were furious when the price of a litre of petrol shot up to about 150 naira ($0.93) overnight from about 65 naira before. The government says it would be economic suicide to give in.

“Deregulation is inevitable to save the Nigerian economy, to ensure transparency and competitiveness in the downstream sector of the petroleum industry and safeguard the future of Nigeria,” presidential spokesperson Ruben Abati told Reuters by phone.

In the capital Abuja thousands gathered under tight security, some in cars adorned with labour union flags.

“What is happening is an injustice. I voted for Jonathan but he has disappointed me,” said Michael Uche, a bodyguard, after checking the Twitter feed on his BlackBerry for the latest on the protest.

“There are graduates with no jobs... living on less than a dollar a day,” he said, complaining that when he tried to fill up his car on Sunday it was 200 naira a litre, so he could only afford to buy two litres.

In Lagos, protesters waved placards saying “Stop killing us with executive lies” and “President Jonathan needs an economic idea. Can anyone help?“.

“We are going to fight them to the last drop of blood,” said Fatai Adepoju, a Lagos civil servant.

Oil workers said production in Nigeria’s oilfields continued uninterrupted, as many had predicted.

“There’s no impact on oil production yet. We’re not anticipating any problems,” said one official at a major oil company, who asked not to be named. A spokesperson for the state oil firm also said production was normal.

In Yenagoa, in the southeastern Niger Delta, a heavy police presence prevented demonstrators from protesting. In nearby Port Harcourt, hundreds gathered, hemmed in by police patrol vans.

In parts of the north and centre, covered by a state of emergency to fight the Boko Haram insurgency, streets in towns and cities such as the volatile city of Jos were deserted.

Refining mission

The lower house of parliament urged both sides to back down on Sunday, but unions are defying a court ruling that the industrial action is illegal.

Many Nigerians see cheap fuel as the only tangible benefit they derive from an oil-rich state where corruption bleeds billions of dollars from state coffers.

Critics say wealthy politicians could have found savings within government first and tackled oil industry corruption.

Despite its huge oil wealth, Nigeria is forced to import costly refined fuel because it lacks its own capacity.

Hopes are that the new pricing regime will prompt investment in oil refineries and reverse disrepair caused by decades of corrupt mismanagement. The subsidy also encouraged smuggling into neighbouring nations such as Benin and Cameroon where fuel is more expensive.

The government estimates it will save 1 trillion naira ($6bn) this year by eliminating the subsidy.
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