Nigerians strike, protest over soaring fuel prices

LAGOS - Hundreds of Nigerians took to the streets on Monday, launching a nationwide strike to protest against the axing of a popular fuel subsidy in Africa's top oil producer.

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

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

Economists say the subsidy merely filled the fuel tanks of the rich and middle classes at the expense of the poor, fed corruption and siphoned off billions of dollars of public funds to a cartel of wealthy fuel importers.

Removing it has been a flagship policy of President Goodluck Jonathan and his economic management team.

"It was 25 percent 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."

But unions, workers and middle class Nigerians with cars were furious when the price of a litre of petrol shot up to around 150 naira ($0.93) overnight from about 65 naira before.

Hundreds 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.

They waved placards saying "Stop killing us with executive lies" and "President Jonathan needs an economic idea. Can anyone help?"

"I have not benefited (from) anything from this government. We are going to fight them to the last drop of blood," said Fatai Adepoju, 35, a civil servant.

Last week thousands of Nigerians gathered in cities across the country to show their anger.

Refining mission

Oil industry experts say the strikes are unlikely to have a significant impact on oil output as production is largely automated and installations well guarded.

Jonathan pleaded with Nigerians to support the removal of subsidies in a live televised speech on Saturday and the lower house of parliament urged both sides to back down in an emergency session on Sunday.

Unions vowed to go ahead with it, despite a court ruling that the industrial action is illegal.

Most people in Nigeria live on less than $2 a day and many - the poor and well-off car owners alike - 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, before imposing a sharp hike in fuel prices on the public.

But Nigeria's oil sector has been distorted by the subsidy.

Until the new pricing regime came in, economists say there was no incentive to invest in its oil refineries and reverse disrepair caused by decades of corrupt mismanagement.

That means that despite producing 2 million barrels of crude every day, the country is forced to import costly refined fuel.

The subsidy also encouraged smuggling into neighbouring nations like Benin and Cameroon where fuel is more expensive.

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