Nigerian fuel subsidy: Strike suspended

Protesters run away from tear gas fired by police officers during a demonstration against spiralling fuel prices in Lagos, Nigeria, Monday, Jan. 16, 2012. Some protests continued after the president announced that prices had been cut

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Nigeria's unions have suspended their strike after the president agreed to cut the cost of petrol following a week of protests.

The strike was called after prices doubled when President Goodluck Jonathan removed a fuel subsidy on 1 January.

Earlier on Monday, he announced that he would restore part of this subsidy.

Nigeria is Africa's biggest oil producer but it imports almost all of its refined fuel.

Correspondents say many Nigerians see cheap fuel as the only benefit they get from their country's oil wealth, much of which is pocketed by corrupt officials.

The unions said they acted to save lives, after receiving information that the security forces had been ordered to use all means to end protests. The decision came as the police and army maintained a heavy presence on the streets of most cities.

Police in the commercial capital, Lagos, fired live bullets into the air and tear gas to disperse hundreds of protesters on Monday.

Army checkpoints were seen in parts of the city for the first time since the protests began a week ago.

Strike 'success'

The Nigeria Labour Congress and the Trade Union Congress told journalists in Nigeria's capital Abuja that they applauded the government's recent promise to explore corruption in the country's oil sector. They described the six-day strike as "a success".

"We are sure that no government or institution will take Nigerians for granted again," said Abdulwaheed Omar, the president of the Nigeria Labour Congress.

The president of Nigeria's Trade Union Congress, Peter Esele, told the BBC's Focus on Africa that the unions would be prepared to consider getting rid of the subsidy "down the road," but that first they wanted to see action from the government on the country's "huge" infrastructure and energy problems.

Analysis

The suspension of strikes and protests by Nigeria's unions will come as a huge relief to ordinary Nigerians, especially those who earn their living from day to day. It will also be a relief for the government of Goodluck Jonathan that faced the strongest resistance from the Nigerian public since he took charge of the country.

It is equally a relief for the international community who must have been concerned by the threat issued by the unions to shut down oil production - a threat that contributed to the surge of oil prices in the oil market.

But the most critical question is: Who won the battle between the Nigerian government and the unions representing the public? I suggest that the people have won.

Many of the critics of the subsidy are aware of the corruption associated with it - they also know that a few individuals used the subsidy to milk the Nigerian treasury and amass huge wealth.

The mass protests are not necessarily about subsidy removal, they are about the deficit of trust in government. Restoring that trust is the mountain President Jonathan now has to climb.

However, the BBC's Mark Lobel in Lagos says that while the bulk of the protesters have come from the unions, it is not yet clear whether others, who have been organising themselves through social media, will follow their call to suspend protests.

Our correspondent says this was the first test of how the government was going to transform the economy, which was a central plank of his re-election campaign last year.

The president has had to climb down but will be glad he has been able to end the crisis, our correspondent says.

In his televised address to the nation, President Jonathan said the government would "continue to pursue full deregulation of the downstream petroleum sector".

"However," he added, "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 97 naira (about $0.60) per litre."

The price of petrol had risen from 65 naira ($0.40; £0.26) to 140 naira when the subsidy was removed without warning on 1 January.

The removal of fuel subsidies - long pushed for by the IMF - was a devastating blow to the large number of Nigerians who live in absolute poverty, correspondents say.

Nigeria's fuel prices

  • Previous price in petrol stations: $0.40/ litre
  • Price in petrol stations after subsidy removed: $0.86
  • Latest price: $0.60
  • Previous black market price: $0.62
  • Black market price after subsidy removed: $1.23
  • Annual cost to government of subsidy: $8bn

The authorities say the subsidy was costing the equivalent of more than $8bn a year, arguing that the money would be better spent on infrastructure and social services.

However, correspondents say many Nigerians feel the money is more likely to be stolen.

Oil accounts for some 80% of Nigeria's state revenues but, after years of corruption and mismanagement, it has hardly any capacity to refine crude oil into fuel, which has to be imported.

The subsidy meant fuel was much cheaper in Nigeria than in neighbouring countries, so large amounts ended up being smuggled abroad.

The government also argues that the biggest beneficiaries of the subsidy were the owners of fuel-importing companies - among the richest people in the country.

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