FOR nigerians who have long enjoyed having their fuel prices subsidized, events in early January pulled the rug out from under them. The nigerian Government removed its oil subsidy from January 1 this year, an action it said has become necessary to provide money for the improvement of the country’s inadequate infrastructure and complete the deregulation of the downstream sector of the oil industry.
　　nigerians have come out in mass protest against this “new Year gift,”as they see the fuel subsidies as their only benefit from the country’s huge oil wealth. Many people have little faith in the government after years of deeply rooted corruption. However despite public anger the government has said there is no going back on the subsidy removal and the various programs it has put in place under the Subsidy Reinvestment and Empowerment Program (SURE) are to be unswervingly implemented in order to benefit nigerians in the long term.
　　Costing billions
　　The Petroleum Pricing Regulatory Agency (PPRA) said the country consumes an average of 35 million liters of fuel daily and that the Federal Government spent more than $86.5 billion on fuel subsidies in the past five years. The country also pays heavily to subsidize kerosene, which is imported through the nigerian national Petroleum Corp. (nnPC).
　　nigeria produced 2.2 million barrels of crude a day in December 2011, according to Bloomberg estimates, and the removal of the subsidy in Africa’s biggest oil producer has resulted in a hundred percent increment in transport fares. This is due to the increase of fuel pump price from $0.4 to $0.87 a liter in the urban areas and between $0.9 and $1.1 a liter in semi-urban and rural areas. The result is food prices have risen along with transport costs in a nation of more than 160 million people where most live on less than $2 a day.
　　Economists say the subsidy promoted corruption and retaining it would mean nigeria would have to enter into large-scale external borrowing. However in a country of 160 million people who live on less than $2 a day the subsidy was a welfare benefit.
　　Critics say that nigeria’s problem lies in its preference to export crude oil rather than refine it. nigeria is Africa’s biggest oil producer, but imports refined petrol. Ongoing mismanagement and corruption have resulted in the country not having the capacity to refine oil into petrol and other fuels. Refining would give ni- geria higher stakes in a deregulated market, encourage medium sized service industries and also create more jobs for the many skilled unemployed citizens.
　　The almost total dependency of the economy on crude export means any small increase in the fuel price impacts on the industrial sector and subsequently trickles down to affect basic needs like food, housing and health
　　People protest
　　The subsidy withdrawal and subsequent rise in costs has hit nigerians hard and caused much anger as this was seen as the people’s only benefit from the nation’s oil wealth. People have taken to march across major parts of the country such as Lagos, Kano, Kwara, Bauchi, Ondo, Benin, Abeokuta and Abuja in protest. Peaceful protests have turned violent and one of the enduring slogans on the streets is, “Remove Corruption, not Subsidy.” Market vendors, youths, members of the nigeria Labor Congress, nLC, Trade Union Congress, TUC, civil society organizations under the umbrella of the Coalition to Save nigeria have all hit the streets in their tens of thousands. The protesters called for the immediate resignation of the Minister of Finance, Dr. ngozi Okonjo-Iwoala and the drastic reduction in the cost of governance, of which the savings could be used to fund development projects and the welfare of nigerians. A call was also made to jettison all market fundamentalist policies/programs of the IMF and World Bank. The International Monetary Fund (IMF) has long urged the Federal Government to remove the subsidy.
　　Union threats to shut down nigeria’s oil output could have a major impact on the economy and global oil prices.
　　Central Bank Governor Lamido Sanusi told Reuters the strikes by the country’s unions were costing the economy more than $600 million a day, while negotiations take place at senior government level.
　　The country’s House of Representatives has called on the government to reinstate fuel subsidies, but economists say the subsidy encouraged corruption and waste and handed billions of dollars of government cash to a cartel of wealthy fuel importers. While the House of Representatives cannot stop the Federal Government from removing subsidies, vocal opposition to President Goodluck Jonathan’s policy comes at a time when the president is already short of supporters.
　　Economic experts, including Central Bank Governor, Sanusi Lamido Sanusi, Federal Minister of Finance, ngozi Okonji-Iweala, Federal Minister of Petroleum Resources Deziani Allison-Madueke, among others, in a recent television debate with representatives of the Civil Liberty Organization all supported the fuel subsidy.
　　


　　No going back
　　The Managing Director of the nigerian Liquefied natural Gas(nLnG), Engineer Chime Ibenechie told the fourth annual conference of the nigerian Association for Energy Economics (nLnG) that gas flaring in nigeria would end in 2012. He said the vast sum of money being spent on fuel subsidies is regretted and the subsidies on gas could be better put to use to provide infrastructure and gas projects.
　　Minister of Information Labaran Maku said the government would not go back on the issue of removing the fuel subsidy. To assist struggling nigerians with the increase in transport resulting from higher fuel prices, government takes“palliative measures”in the form of new buses.
　　“Government has placed [an] order for massive supply of decent diesel-engine buses to solve the transportation problem. In the next couple of weeks, there will be sufficient mass transit buses. It will go on for two years. Any moment from now, we should take delivery of these buses,” said Maku in early January.
　　He added that the Federal Executive Council was not out to punish nigerians.
　　“Our country is in a difficult situation and we are appealing to the citizens to appreciate this difficulty. With the measures we have taken, we are confident that we will correct the imbalance in the economy,” Maku said.
　　According to Minister of Trade Olusegun Aganga, in early January about 1,600 diesel-powered mass transit buses would be made available for distribution across the country.
　　“For the first time, we want to put in place a sustainable robust mass transit program to reduce the pains fellow nigerians are going through now,” Aganga said. Beneficiaries of the Urban Mass Transit Scheme are expected to repay the cost of this initiative in the form of a loan over five years.
　　The government estimates it will save $6.2 billion this year by eliminating the subsidy.
　　(Reporting from Nigeria)