End of decades of Nigeria cheap gas fuels unrest

January 7, 2012 - 3:16 PM

LAGOS, Nigeria (AP) — For decades, Nigerians have expected low gasoline prices, one of the few perks seen by residents of an oil-rich nation where corruption siphons billions. Now, that long-cherished benefit has ended, more than doubling prices and fueling a planned nationwide strike by angry labor unions.

The strike scheduled for Monday already bears echoes to a similar nationwide strike in 2003 that saw the country almost entirely shut down by angry laborers and residents. And while analysts say the subsidy's end frees up $8 billion a year that is needed to help the country, they warn the way it was carried out only alienates those living in a nation of more than 160 million people where only the wealthy elite benefit from oil.

"The government does not have credibility," said Adeola Adenikinju, an economics professor at the University of Ibadan who has long supported ending the fuel subsidy. "I think the issue is that Nigerians don't trust government."

Gas prices have risen from $1.70 per gallon (45 cents per liter) to at least $3.50 per gallon (94 cents per liter) since the subsidy ended Sunday at the order of President Goodluck Jonathan. That also spurred a spike in prices for food and transportation across Nigeria, a nation where most live on less than $2 a day.

In response, two major unions have called for a strike Monday. While an industrial court has issued an order trying to stop the strike, the Nigerian Labor Congress already has said it will continue out into the streets no matter what — mirroring a 2003 strike where it ignored a court order as well.

That eight-day strike in July saw work in the country halted as labor activists and others attacked shops that remained open and took over the air traffic control towers at the Lagos' international airport. Police fought with activists and local gang members swept up into violence, firing tear gas and shooting others dead.

More troubling for the U.S., which relies on Nigeria for its own fuel supplies, oil workers began walking off the job, stalling production. Nigeria, an OPEC member nation, now produces about 2.4 million barrels of crude oil a day.

Ultimately, the strike ended when the government agreed to bring prices down with subsidies. However, Jonathan and other government officials now say they won't back down from their decision, warning Nigeria will collapse under the weight of the ballooning costs of the subsidies.

Providing cheap gas wasn't that expensive back in 1973, when military ruler Gen. Yakubu "Jack" Gowon first brought uniform fuel prices to the country. Nigeria still had refineries able to keep up with demand, with the state-run oil company sending crude directly from the oil fields to be produced into gasoline, Adenikinju said.

But by 2000, Nigeria's refineries had fallen apart from corruption and mismanagement, unable to keep up with demand from the fast-growing population, the professor said. The country, newly a democracy under President Olusegun Obasanjo, began paying companies large subsidies to import fuel to sell at a set rate far under the free market value.

Those companies, often politically connected, made huge sums of money. Meanwhile, black marketeers illegally ran the cheap fuel out of Nigeria to surrounding countries where gasoline sells for much higher.

But while many Nigerians recognize the trouble with the subsidy, they remain highly suspicious of the nation's kleptocratic government.

"The sudden doubling (or more) of fuel prices on Jan. 1, with little advance warning or clearly announced palliative measures undertaken by the Jonathan administration, was a recipe for a popular backlash," wrote analyst Philippe de Pontet of the Eurasia Group.

For now, it appears that the strike will proceed Monday, though rumors persist about ongoing negotiations between the government and labor leaders. Others have begun a loose group of protests called "Occupy Nigeria," inspired by those near Wall Street in New York. Their anger extends beyond just the fuel subsidy to the government's weak response to ongoing violence in Nigeria by a radical Muslim sect that killed at least 510 people last year, according to an Associated Press count.

In all, Nigerians appear to be asking the government for clear, concrete signs it is working after years without stable electricity and universal access to clean drinking water. Though the government has promised to put some of the $8 billion in saving from the subsidy toward improvement projects, they remain vague with details.

"They are not measurable, they cannot be monitored," Adenikinju said. "Nigerians cannot see how those things will impact their live in the short time."

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Jon Gambrell can be reached at www.twitter.com/jongambrellAP.