LAGOS, Jan 2 – Long queues formed at petrol stations and unions threatened to paralyse Nigeria on Monday after the government launched a deeply controversial measure that has already more than doubled pump prices.
The move announced on Sunday in Africa’s most populous nation and largest oil producer immediately ends fuel subsidies on petrol, a policy that had held pump prices at 65 naira per litre ($0.40, 0.30 euros).
On Monday, prices at many stations had more than doubled to around 140 naira per litre in a country where most of the population lives on less than two dollars a day.
Queues began forming on Sunday and the situation continued on Monday, with drivers hoping to purchase fuel before prices rise further and fearing a strike by tanker drivers will result in a shortage.
“We intend to work with other groups to completely paralyse the government and make the country ungovernable,” said Denja Yaqub, assistant secretary general of the Nigeria Labour Congress, one of the country’s main unions.
“They have pushed Nigerians too far.”
Protests are to be organised in the coming days, said Yaqub.
Economists and government officials view removing the subsidy as essential to allow for more spending on the country’s woefully inadequate infrastructure and to ease pressure on its foreign reserves.
Nigerians however see the subsidy as their only benefit from the nation’s oil wealth.
The government says more than $8 billion was spent in 2011 on fuel subsidies.
Nigeria refines very little of its crude despite being a major oil producer and OPEC member, a situation blamed on corruption and mismanagement, forcing the country to import fuel even while it exports crude.
Subsidies were supposed to keep pump prices low even though fuel is imported at market prices, but there have been serious questions over how the subsidy cash has been paid out.
There have been accusations that much of the money goes to a handful of corrupt elites. Fuel was also sold above the set price in many areas outside of major cities.
The new policy deregulates the sector, though prices will still have to be in line with a benchmark rate to be posted regularly on the Petroleum Products Pricing Regulatory Agency website. The rate will be in line with market conditions.
President Goodluck Jonathan along with his highly respected central bank chief, Lamido Sanusi, and finance minister, ex-World Bank managing director Ngozi Okonjo-Iweala, pushed hard for the subsidy removal.
They have argued that it is one of the keys to unlocking development in a country that has been unable to provide even sufficient electricity to its population despite its oil wealth.
Blackouts occur daily and roads are in deplorable condition in the West African nation.
However, years of deeply rooted corruption and mismanagement have resulted in profound distrust of government officials in Nigeria, which is consistently ranked as one of the world’s most graft-ridden nations.
Residents have repeatedly argued that they do not trust officials when they say the money saved from subsidies will be wisely spent.